These workers are allowed to save $35,000 a year in their 401(k)s. Here’s how many actually do it.
A little-noticed change in retirement law means some older workers will soon be allowed to funnel roughly $35,000 of their own pay into a 401(k) in a single year. The catch: very few will actually hit that number.
Who gets the bigger limit
– Today’s limits (2024): Employees can defer up to $23,000 to a 401(k), plus a $7,500 catch-up if they’re 50 or older, for a total employee contribution of $30,500.
– What’s changing: Beginning in 2025, workers ages 60–63 get a special, temporary boost to the catch-up. It must be the greater of $10,000 or 150% of the standard age-50 catch-up (150% of $7,500 is $11,250), indexed for inflation.
– Why people are saying “$35,000”: With expected inflation adjustments for 2025, the standard deferral limit plus the age-60–63 catch-up should land near the mid–$30,000s. Think roughly $35,000 of employee contributions, separate from any employer match. (Final IRS limits are set each fall.)
Important: Employer contributions are on top of that. However, all employee and employer money together still can’t exceed the annual additions cap (it’s $69,000 in 2024, or $76,500 if you include age-50+ catch-ups), also indexed.
So how many people will really save that much?
Industry data suggest only a minority of savers hit even today’s lower ceilings, and the higher age-60–63 cap will be reached by a relatively small, higher-income slice.
What we know from large recordkeepers’ recurring reports (such as Vanguard and Fidelity):
– Across all ages, roughly 1 in 7 to 1 in 6 participants max out their standard employee deferral in a given year.
– Among workers age 50 and older, participation is higher, and roughly one in five to one in three uses catch-up contributions at all—but most still don’t hit the absolute maximum.
– Within ages 60–63, maxing out is concentrated among higher earners; many others increase saving but fall short of the ceiling.
Putting that together:
– Of everyone eligible for the 60–63 super–catch-up, a reasonable expectation is that roughly 10–20% will reach the new ~$35,000 employee limit in any given year.
– As a share of all 401(k) participants across all ages, that’s a low single-digit percentage.
Why so few hit the top
– Income and math: To contribute $35,000, even a strong 15% savings rate requires earnings around $230,000. Many households can’t or don’t push savings rates that high, especially for just a few years.
– Plan frictions: Some plans cap per-paycheck deferral percentages or exclude certain bonus types, making it easy to fall short unless you front-load contributions and include bonuses.
– Competing priorities: Late-career workers often balance college costs, elder care, or mortgage payoff with retirement saving.
– Tax nuance: Starting in 2026, many higher earners (w-2 wages above an indexed threshold) must make catch-ups as Roth, which can feel costlier in the moment even if beneficial long term.
– Not every plan is ready: Employers must update plan documents and payroll systems to support the special 60–63 catch-up. Some may lag.
Who is most likely to do it
– Late-career, higher-income workers (often in safe harbor plans that allow HCEs to defer the max)
– People who receive large bonuses or equity and can front-load deferrals
– Savers who already max the standard limit and are simply adding the incremental 60–63 catch-up
What hitting ~$35,000 can mean
– Four years of an extra $4,000–$5,000 beyond the standard 50+ catch-up can add $16,000–$20,000 in new principal, plus market growth. Even invested late in a career, that’s meaningful runway—especially if paired with an employer match that doesn’t count toward your employee cap.
How to give yourself a shot
– Confirm eligibility: The window runs from January 1 of the year you turn 60 through December 31 of the year you turn 63.
– Update elections early: Raise your deferral rate in January and include bonuses so you don’t bump into per-paycheck limits.
– Mind the combined cap: If employer contributions are rich, keep an eye on the total annual additions limit to avoid inadvertent excesses.
– Coordinate Roth vs pre-tax: If you’re subject to the Roth-only catch-up rule (kicks in 2026), decide whether to shift some base deferrals to pre-tax to manage your overall tax picture.
– Use other accounts too: HSAs, IRAs, and—if you’re in the public or nonprofit sector—403(b) or 457(b) plans can provide additional tax-advantaged room.
Bottom line
Yes, some workers in their early 60s will be allowed to save about $35,000 a year of their own pay in a 401(k), starting in 2025. In practice, only a minority—primarily higher earners who already save aggressively—will hit that number. For everyone else, the rule is still a win: it raises the ceiling, but the real power comes from steadily increasing your savings rate and capturing your employer match, whether or not you ever touch the top. Limits change annually, so check your plan and the IRS updates each fall before you set your target.
