SECURE 2.0 Act Allows Older Workers to put Saving on Fast Track

Jaron Carmichael, CFP®, AIF®

Director of Retirement Group, Wealth Advisor


Among its many changes to retirement planning, the SECURE 2.0 Act will raise catch-up contribution limits for older workers.

Two men looking at a white board.

Saving enough money to retire comfortably can be a challenge, especially for young adults who are beginning a career while also handling student loans, a mortgage, and the costs of having children. A recent U.S. Federal Reserve survey found that while most working Americans had some type of retirement account, only 40% thought their saving was on track.1

To help more American workers achieve their long-range financial goals, the newly passed SECURE 2.0 Act is raising the annual cap on catch-up contributions—in excess of the standard contribution limit—to individual retirement accounts (IRAs) and 401(k) plans. Also, SECURE 2.0 will help ensure that the allowable catch-up contribution keeps pace with inflation.

Enacted in late December 2022 as an update to the 2019 Setting Every Community Up for Retirement (SECURE) Act, SECURE 2.0 introduces more than 90 provisions that will take effect over the next three years. These changes include:


Indexing the IRA catch-up limit to inflation.

Under current law, the limit on IRA contributions is increased by $1,000 for individuals age 50 and older. Starting in 2024, the maximum IRA catch-up amount will be indexed to inflation and increase annually in multiples of $100.


Catch-up contributions designated to Roth account.

Starting in 2024, for employer-sponsored retirement plan participants who earned more than $145,000 during the prior year, all catch-up contributions after age 50 must be made to a Roth IRA or Roth 401(k) account using after-tax dollars. Employees earning less than $145,000 may continue to make pre-tax catch-up contributions. This income threshold will be indexed annually for inflation.


Window for higher savings.

Starting in 2025, people ages 60 to 63 can make additional contributions to their workplace plan beyond the standard catch-up limit, which is currently $7,500. During that window, older workers will be allowed to add the greater of either $10,000 or 150% of the standard catch-up contribution limit each year. Again, these increased amounts will be indexed annually for inflation after 2025.

In tandem with other provisions of the SECURE 2.0 Act, the increased catch-up contribution limits will give people a greater opportunity to fund the retirement lifestyle that they envision. We encourage you to work closely with a trusted financial advisor in evaluating how SECURE 2.0 can influence your overall wealth management strategy.

Visit our SECURE 2.0 Act resource page to learn more. You can watch webinars highlighting various benefits of the new law, read additional commentary by Mercer Advisors senior wealth managers, and keep up with the latest news about this important legislation.

Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

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