Retirement planning can feel like navigating uncharted seas—especially for employees inching closer to retirement age.
✨ Enter the most recent changes to Secure 2.0, the legislative overhaul aimed at making retirement saving less of a headache and more of a reality for American workers.
One of the standout provisions? Special rules for employees aged 60-63, designed to give a turbo boost to their savings when they need it most.
For employers, this update isn’t just a regulatory shift; it’s an opportunity to foster a supportive, retirement-ready workforce.
Let’s break down these changes and explore ways your organization can help employees nearing retirement achieve financial security and peace of mind.
What's New for Employees Aged 60-63 in 2025?
Secure 2.0 enhances the "catch-up contribution" rules for workers aged 60 to 63, a critical window in their retirement journey.
Starting in 2025, eligible employees can make higher catch-up contributions to their workplace retirement plans, such as 401(k)s or 403(b)s.
Here's the scoop:
The standard catch-up contribution limit is currently $7,500 for employees aged 50 and older.
Secure 2.0 raises this limit for the 60-63 age group to the greater of $10,000 or 150% of the regular catch-up limit for the year.
These amounts will also be indexed for inflation, ensuring their value keeps pace with the economy.
This rule recognizes that these years often represent the home stretch for retirement savings, allowing employees to supercharge their nest egg when their earning potential is at its peak.
But wait—there’s a catch-up to the catch-up: Starting in 2024, all catch-up contributions for employees earning more than $145,000 annually must be made on a Roth (after-tax) basis.
While this may alter some planning strategies, it also offers a silver lining—Roth accounts provide tax-free withdrawals during retirement.
ref: https://www.kiplinger.com/retirement/bipartisan-retirement-savings-package-in-massive-budget-bill
Why These Changes Matter
Many employees aged 60-63 are feeling the financial squeeze:
Sandwich generation pressures: Balancing elder care and support for adult children.
Healthcare costs: Bracing for higher expenses in their golden years.
Economic shifts: Recovering from market downturns or personal financial setbacks.
Secure 2.0’s changes allow these workers to prioritize their retirement goals without sacrificing current obligations.
📢Attention Employers: Changes can be scary, but consider this a chance to align retirement planning benefits with these new opportunities, enhancing both retention, company culture, and overall morale.
Looking for some ideas?
Check back for ideas on making the retirement experience less of an endpoint and instead provide proactive support in the success of their next chapters!
Comments