A significant change to 401(k) savings for 2025 offers a new opportunity for older workers to save more for retirement. As Americans face rising retirement costs, with many expecting to need $1.26 million to retire comfortably, a growing concern about outliving savings has led to new options for boosting retirement funds.

Starting in 2025, older workers can take advantage of an expanded “catch-up” contribution limit. For workers aged 50 and older, the 401(k) contribution limit is increasing to an extra $7,500, bringing the total deferral limit to $30,000. However, Secure 2.0 legislation offers even more help: Workers between the ages of 60 to 63 can defer up to $34,750, thanks to a higher catch-up contribution limit of $11,250 for this age group.

Despite the opportunity, not all retirement plans will implement this change. According to Fidelity data, 3% of retirement plans won’t adopt the higher catch-up limits for 2025, meaning contributions will stop automatically once the $7,500 deferral limit is reached.

Experts emphasize the benefits of this "super funding" feature for higher earners looking for a tax deduction, as 401(k) contributions are made pre-tax, providing an immediate tax break. However, participants will owe income tax on withdrawals later.

To be eligible for the higher catch-up contribution, investors must be the qualifying age by December 31, 2025. For example, someone who turns 60 in December 2025 qualifies, while someone turning 64 before the year ends will not.