As 2026 approaches, retirement savers will face a mix of welcome boosts and new requirements that could reshape their saving strategies.
The base contribution limit for 401(k), 403(b), 457, and TSP accounts jumps from $23,500 to $24,500, giving workers an extra $1,000 to stash away tax-deferred. Traditional contributions still reduce current tax bills, while withdrawals after age 59.5 get taxed as ordinary income. Early withdrawals trigger a 10% penalty on top of regular taxes. Younger workers especially benefit from maintaining stock exposure to maximize long-term growth.
Workers age 50 and older see their catch-up limit rise from $7,500 to $8,000, allowing total contributions of $32,500 in 2026. Those between 60 and 63 can use a super catch-up provision of $11,250. IRA catch-up limits reach $8,500 for those over 50. These inflation-indexed increases help older workers accelerate savings as retirement nears.
Older workers gain expanded catch-up contributions in 2026, with those 60-63 eligible for an $11,250 super catch-up provision to accelerate retirement savings.
A significant change hits high earners starting in 2026. Anyone age 50 or older who earned more than $150,000 in the previous year must make catch-up contributions to Roth accounts only. No pre-tax option remains for this group. This SECURE 2.0 rule starts January 1, 2026, with full compliance required by 2027. High earners lose the immediate tax break on catch-up savings but gain tax-free growth. The switch to Roth catch-up contributions may reduce take-home pay and push up adjusted gross income, potentially affecting Medicare premiums and other income-based thresholds.
Social Security recipients receive a 2.8% cost-of-living adjustment effective January 2026. Average retirement benefits climb $56 monthly to $2,071, while survivor benefits increase $52 to $1,919. However, Medicare Part B premiums rise by $17.90 monthly, eating into that gain.
The full retirement age reaches 66 years and 10 months for people born in 1959, inching closer to the final target of 67. Delayed retirement credits still add two-thirds of a percent monthly, totaling 8% yearly until age 70.
The Social Security wage cap increases $7,500 for 2026. Earnings limits apply to those under full retirement age, with $1 withheld for every $2 earned over $24,480. IRA deduction phase-outs now begin at higher income thresholds, giving more workers access to upfront tax breaks. Self-employed workers can contribute up to $72,000 in 2026 through solo 401(k) plans or SEP-IRAs, representing a $2,000 increase from the previous year’s limit.
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