A Retirement Mistake 60-Year-Olds May Not Know About
Retirement planning should look different for each person depending on their unique financial situation, but there are common mistakes that everyone should avoid.
Another mistake that retirees can make is underutilizing participating contributions.
What are hosting contributions?
Catch-up contributions allow you to fuel your nest egg, or hold onto retirement savings if you’re not on track. The IRS limits how much you can contribute to tax-advantaged retirement savings accounts, such as 401(k)s and individual retirement accounts (IRAs). But if you turn 50, you can face catch-up contributions — and make even higher contributions to a 401(k) when you’re 60 to 63.
In 2026, the catch-up contribution limit for 401(k)s is $8,000 for ages 50 to 59, and for ages 60 and over. If you are age 60 to 63, that amount is $11,250. This also applies to 457(b) and 403(b) plans. If you’re 50 or older, you can contribute an additional $1,100 to an individual retirement account.
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The benefit of donating more money
Additional contributions can add up significantly as you save for your good years. Because most people are in their prime earning years in their 50s, it can be a good time to set aside some money for retirement.
Depending on how long your retirement is, some of those savings will take years or decades to compound. If you have a lot of money in your retirement accounts, you have many choices when it comes to when to take Social Security and when to retire, as well as how much to spend on your lifestyle in retirement and how much to leave to your heirs.
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Because of the tax advantages of accounts like 401(k)s, you may be able to lower your taxes by investing more dollars in a retirement savings account versus a taxable brokerage.
“Say you’re currently in a 32% federal tax bracket. You’ll save $1,200 in taxes by making a higher withholding now and enjoy tax-deferred growth on total contributions until the money is withdrawn — at which point you’ll likely be in a lower tax bracket,” the Teacher Insurance and Annuity Association of America (TIAA) says on its website. “That tax-deferred growth can add up quickly, even for someone who is only 10 years away from retirement.”
It is important that you review your specific retirement plan and financial situation to ensure that making participating contributions makes sense for you. Some people may want to put their money to other purposes, for example. But if you didn’t know about the benefits of catch-up contributions and you’re now in your 50s or 60s, it’s not too late to correct course and add more money to your retirement savings accounts.
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