Boost Retirement Savings Using Catch-Up Contributions In Your 50s

Designed to bolster retirement savings, catch-up contributions give you an opportunity to fast-track your financial readiness before you actually retire. Yet many people either underutilize them or overlook them entirely. This article explores what catch-up contributions are and discusses strategies on how to use them effectively.

What Are Catch-Up Contributions?

These are additional amounts that individuals age 50 or older are allowed to contribute to their retirement accounts beyond the standard annual limits. Introduced under the Economic Growth and Tax Relief Reconciliation Act of 2001, catch-up contributions are intended to help individuals who may have fallen behind in their retirement savings or those who simply want to enhance their financial cushion in the years leading up to retirement.

For example, in 2025, the IRS allows people 50 or older to contribute an additional $7,500 annually to their 401(k) or 403(b) plans, beyond the regular limit of $23,500. For those investing in traditional or Roth IRAs, the 2025 limits are $7,000 with a $1,000 catch-up. Making additional contributions to your retirement accounts, even toward your last working years, can significantly enhance your retirement savings, especially with compounding.

To be eligible, you must turn 50 at any point during the calendar year for which you plan to make the additional contribution. This means if you turn 50 in December, you’re eligible to make catch-up contributions for that entire year. Lastly, you should note that the IRS periodically changes the annual contribution limits for retirement accounts, often to adjust for inflation.

Strategies To Maximize Catch-Up Contributions

1. Reallocate Your Budget Intentionally

Review and adjust your current monthly budget to make room for catch-up contributions. For example, you can reduce non-essential expenses such as a streaming service or daily coffee runs and funnel the savings to your retirement account. When added together, small changes like these can result in up to $200 to $500 per month redirected to your retirement.

If you are following a structured budget, for example the 50/30/20 rule, where 50% of income goes to needs, 30% to wants, and 20% to savings, you may adjust the ratio as you near retirement age to make more aggressive savings, say 50/10/40. Consider also evaluating larger but irregular expenses such as annual vacations, car upgrades, or high-end electronics. Delaying a $3,000 vacation or not getting the new iPhone is a small sacrifice compared to the long-term security you may gain from a well-funded retirement account.

If you intentionally reallocate and adjust your budget toward catch-up contributions, you not only boost your retirement savings but also build sustainable financial habits. Over time, these contributions can compound into more savings and lead to a more comfortable retirement.

2. Automate

Consistency is more important than intensity when it comes to long-term savings. Automating your contributions ensures that money is directed toward retirement before it is available to spend elsewhere. This pay-yourself-first strategy is especially powerful for catch-up contributions, which may otherwise be postponed or missed altogether.

For example, if you are eligible to contribute a total of $31,000 (regular and catch-up combined) to your 401(k), break that amount into per-paycheck installments. Supposing you are paid biweekly, that means automatically deferring around $1,170 from each paycheck, which ensures you reach the IRS limit toward the end of the year. Doing this also effectively applies the dollar-cost averaging strategy, where you make investments at regular intervals, reducing the risk of poorly timed, lump-sum investments.

3. Use Windfalls Wisely

You need not rely solely on your monthly income for funding your retirement savings. Periodic financial windfalls, such as year-end bonuses, tax refunds, or even an inheritance, are excellent opportunities to fund catch-up contributions.

Commit a fixed percentage of any windfall to retirement savings. This way, you also reduce the temptation for luxury or impulse spending. For example, earmarking 50% of a $10,000 bonus for catch-up contributions is a great boost, and it may even reduce your tax liability, depending on your retirement account type.

4. Take Advantage Of Increased Catch-up Provisions

Starting 2025, individuals age 60 to 63 who participate in 401(k), 403(b), and governmental 457(b) plans are eligible to contribute a super catch-up contribution, by virtue of the SECURE 2.0 Act. Specifically, the catch-up ceiling is increased to the greater of $10,000 or 150% of the annual regular catch-up contribution (or $11,250 in 2025). This provision is designed to help late-career workers rapidly accelerate their retirement savings in the years immediately preceding retirement.

Additionally, public sector and nonprofit employees who have 457(b) plans may qualify for the double catch-up rule, a provision that allows contributions of up to twice the standard limit within the three years leading up to their plan’s normal retirement age. Consult your plan administrator to determine your eligibility and ensure compliance.

5. Coordinate With Your Spouse

For married couples, coordinating retirement strategies can substantially boost overall savings. If both of you are employed and have access to workplace retirement accounts such as 401(k)s, contribute the maximum allowed amount, including the catch-up. For 2025, that means a combined $61,000 in total contributions.

And even when one spouse does not earn income, you can still take advantage of the spousal IRA. The working spouse can contribute to an IRA on behalf of their partner, up to the annual limit, including the $1,000 catch-up contribution if the non-working spouse is age 50 or older. This strategy is particularly valuable for stay-at-home parents or individuals who have paused their careers, allowing them to build retirement savings and maintain tax-advantaged growth.

You may also coordinate between making pre-tax or Roth contributions, depending on projected income needs and tax liabilities in retirement. Consult a financial advisor or tax professional for further guidance.

6. Use Health Savings Accounts For Supplementary Retirement Needs

Though not traditionally considered a retirement account, an HSA is a powerful tool for those age 55 or older. Once eligible, you can contribute an additional $1,000 per year on top of the standard limits.

Used for qualified medical expenses, HSAs offer triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals. After age 65, HSA funds can also be withdrawn for non-medical expenses without penalty (though still taxed as ordinary income), making them a flexible retirement source.

7. Avoid Common Mistakes

Despite the benefits of catch-up contributions, many individuals make avoidable errors that undermine their effectiveness. For example, some people assume they can only make catch-up contributions in the year following their 50th birthday, when in fact, eligibility begins in the calendar year you turn 50. Missing that one year can mean thousands of dollars in tax-advantaged savings.

Another common mistake is on how contribution limits apply across multiple retirement plans. Many workers invest in both employer-sponsored plans and IRAs but fail to coordinate contributions appropriately. While limits apply separately to different plan types, each has its own rules, and exceeding the limits can lead to IRS penalties or disallowed contributions. Understand your specific plans and seek professional guidance if necessary to ensure compliance.

Other common mistakes involve not knowing the difference between Roth and traditional plans, assuming employer match applies to catch-up contributions (they usually don’t), neglecting the special super or double catch-up in some plans, and not making catch-up contributions altogether. Many savers also do not review and adjust their contributions based on salary increases or inflation-adjusted IRS limits. This leads to leaving money on the table and missed growth opportunities.

8. Seek Professional Advice

Catch-up contributions are most effective when implemented within a broader retirement strategy. And you don’t need to do things alone. For example, a qualified financial advisor can help you determine whether pre-tax or Roth contributions make more sense based on your income trajectory tax purpose, and overall plans. They can tell you about the nuances of spousal IRAs or assist you in realigning your budget.

Advisors can also identify opportunities for tax-loss harvesting, Roth conversions, Social Security optimization, estate planning, and other strategies which can enhance the impact of every dollar you save.

If you think you need a financial advisor, don’t hesitate to consult one. They can guide you in various aspects of your retirement and overall financial planning. Just remember to vet a potential advisor before signing with them. You can use FINRA’s BrokerCheck tool or the SEC’s Investment Adviser Public Disclosure website to verify their credentials, certifications, and history.

Final Thoughts

Catch-up contributions are some of the most underutilized tools in retirement planning. If you are 50 or older, you get an additional opportunity to increase your retirement savings. But like any other tool, their effectiveness depends on strategy, consistency, and informed decision-making.