The final years before retirement often bring a sense of urgency. You look at your savings and wonder if it will be enough for the decades ahead. Congress recognized this widespread concern and passed the SECURE 2.0 Act, a law with a powerful tool just for people in this situation.
A new “super catch-up” rule creates a special four-year window for those aged 60 to 63. This is not a small adjustment; it is a major opportunity to accelerate your savings and dramatically change your financial outlook right before you stop working. It’s a final chance to make a big impact on your nest egg.
Why Your Final Years of Work Are So Important
The ‘Super Catch-Up’ Savings Window
A new provision from the SECURE 2.0 Act starting in
Standard Catch-Up
“Super” Catch-Up
That’s an EXTRA $3,750 per year you can save during that 4-year window!
Getting close to retirement can feel like a race against the clock. It’s the time when you look at your savings and wonder, “Is this enough?” The U.S. Congress saw that many people were worried about this. So, they passed the SECURE 2.0 Act of 2022 to help people save more.
One part of this law is a big deal for people nearing retirement. It’s a “super catch-up” rule that lets you save a lot more money in a short time. This isn’t a small change.
It creates a special four-year window for people aged 60 to 63 to boost their savings. It could change your financial picture right before you retire.
Why This New Rule Is a Big Deal
Let’s be honest: most people feel like they are behind on retirement savings. Data shows this is a real problem. The typical household with people aged 55 to 64 has only $185,000 saved for retirement.
You might see articles that say the average savings is much higher, around $537,560. But that number is misleading because a few very wealthy people pull the average up.
The median number, $185,000, is what the person in the middle has, which is a more realistic picture for most Americans.
This is a lot less than what experts suggest. A common guideline is to have eight times your yearly income saved by age 60. Even people with a 401(k) at work are often behind. The median 401(k) balance for people aged 55 to 64 was just $87,571 at the end of 2023.
So, this new rule is more than just a nice perk. Lawmakers created it to give people a final chance to close the gap in their savings. It’s a lifeline for those in the last few years of their careers.
How the $11,250 Super Catch-Up Works
What Is This New Rule?
The rule is part of the SECURE 2.0 Act. In simple terms, if you are between 60 and 63 years old. The law lets you put more money into your workplace retirement plan than your younger or older coworkers.
How Much More Can You Actually Save?
To see how big this is, let’s look at the contribution limits from the IRS:
- Regular Savings Limit: Anyone can save up to $23,500 in their 401(k).
- Standard Catch-Up (Age 50+): If you’re 50 or older, you can save an extra $7,500. That brings your total to $31,000.
- New Super Catch-Up (Ages 60-63): If you’re in this age group, you can save an extra $11,250 on top of the regular limit.
The new limit is based on a formula. It’s the greater of $10,000 or 150% of the regular catch-up limit. 150% of $7,500 is $11,250. Since that’s more than $10,000, that’s the new limit. This means people aged 60 to 63 can save a total of $34,750 ($23,500 + $11,250). That’s a big jump from the $31,000 others can save.
Who Can Use This Rule?
Three things decide if you can use this new rule: your age, your retirement plan, and your employer.
Age: You can use the higher limit for the whole year you turn 60, 61, 62, or 63. For , that means people born between 1962 and 1965 are eligible.
Eligible Plans: The rule works for most workplace plans, like 401(k)s, 403(b)s, and governmental 457(b) plans. It also applies to the federal Thrift Savings Plan (TSP). It does not apply to IRAs, which have their own separate, smaller catch-up rules.
Employer Adoption: This is the most important part. Your employer has to choose to offer this feature. It’s not automatic. You need to ask your HR department if your company’s plan will include it.
Good News: Making Extra Contributions Is Easy
You probably won’t have to fill out extra forms to save this extra money. Most retirement plans now use a “spillover” method. You just pick one savings percentage from your paycheck. The system keeps track of your savings.
Once you hit the regular limit, any more money you save automatically “spills over” and counts as catch-up savings until you hit that limit, too. All you have to do is set your contribution percentage high enough to max everything out.
How This Adds Up to an Extra $280,000
The Math Behind the Money
The idea that you could add over $280,000 to your savings isn’t just about the money you put in. It’s about how that money can grow over time. The math is based on someone saving the maximum amount for all four years they are eligible.
The total you can save is $34,750 ($23,500 regular + $11,250 super catch-up). If you do that for four years, you will have saved a total of $139,000. The extra wealth comes from that large sum growing in your account for years after you save it.
How We Project the Growth
To see how this could grow, we need to make a few assumptions.
Savings Period: You save the max of $34,750 at the end of each year from age 60 to 63.
Growth Period: After you stop making these extra savings at age 63, the money grows for another 11 years, until you turn 75.
Rate of Return: We’ll use an average return of 9% per year. This is a reasonable estimate based on how the U.S. stock market (the S&P 500) has performed over the long run. The 20-year average is about 9.05%, and the 30-year is 9.33%.
It’s important to remember this is just an example. The stock market goes up and down, and your actual results will be different.
See the Growth for Yourself
This table shows how saving the maximum from age 60 to 63 can turn into a lot of money. It shows four years of saving followed by 11 years of growth.
As you can see, the $139,000 you put in could grow to over $446,000 by the time you’re 75. The growth alone is over $280,000. This shows how powerful this rule can be.
Your 4-Step Plan to Use This Rule
Turning this rule into real money takes a few simple steps. Here is a checklist for anyone aged 60-63 who wants to get ready.
Step 1: Ask Your HR Department
This is the most important step. Don’t just assume your plan will offer this. You need to check.
Ask a direct question like: “Does our 401(k) plan plan to offer the new, higher catch-up contribution for people ages 60 to 63 starting. Getting a clear “yes” or “no” helps you plan.
Step 2: Figure Out Your New Savings Rate
Once you know your plan offers it, you need to do some math. To save the full $34,750, you need to know what percentage of your salary that is.
A simple formula: (Target Annual Contribution / Annual Salary) * 100 = Required Deferral Percentage. For example, if you make $150,000 a year, you would need to save about 23.2% of your pay to hit the max. Also, check if your plan limits the percentage you can save.
Step 3: Look at Your Budget
Saving an extra $11,250 a year means finding an extra $937.50 each month. That’s a lot for most people. You’ll need to look at your budget to see where that money can come from. Some ideas include:
- Using money that used to go to a car or mortgage payment that’s now paid off.
- Cutting back on things like vacations or eating out for a few years.
- Pausing savings for other goals to focus on this tax-friendly opportunity.
Step 4: Change Your Contribution Online
The last step is to make the change. You can usually do this on your retirement plan’s website (like Fidelity or Vanguard). Go to your contribution settings and increase your savings percentage.
To make sure the new rate starts with your first paycheck, you should make this change in late 2024 or right at the start of the new year.
Important Details You Need to Know
This rule is a great opportunity, but there are a few details to be aware of, especially for high earners.
The High-Earner Rule and a Special One-Year Window
A big part of the SECURE 2.0 Act is a rule for high earners. It says that if you earned more than $145,000 in the previous year, all of your catch-up savings must be made into a Roth (after-tax) account.
The super catch-up starts, but the Roth rule for high earners starts a year later. This creates a special window. Only high earners aged 60-63 can make their full $11,250 super catch-up contribution as a traditional, pre-tax saving.
Pre-Tax or Roth? (For Those Who Have a Choice)
If you make less than $145,000, you can choose between pre-tax (Traditional) and after-tax (Roth) savings. The right choice depends on whether you think your taxes will be higher or lower in retirement.
Pre-Tax Savings
You get a tax break now because the money comes out of your paycheck before taxes. You’ll pay taxes on the money when you take it out in retirement. This is often a good choice if you expect to be in a lower tax bracket when you retire.
Roth Savings
You pay taxes on the money now, so you don’t get a tax break today. But when you take the money out in retirement, it’s completely tax-free, including all the growth. This is often a good choice if you expect to be in the same or a higher tax bracket in retirement.
It’s a “Use It or Lose It” Window
Remember, this extra savings room is only for ages 60, 61, 62, and 63. As soon as you turn 64, your catch-up limit drops back to the standard amount. This means you have to plan ahead to make the most of these four years.
A Rule for Big Companies
There’s one more technical rule that might apply if you work for a large company. It’s called the “universal availability” rule. It says that if one part of a large company offers the super catch-up, then all other parts of that same company have to offer it, too. This makes sure the benefit is offered fairly to all employees.
To see the advantage for the 60-63 age group, look at this table. It compares the maximum savings for all age groups.
This chart clearly shows the special, temporary advantage that only people in the 60-63 age sweet spot have.
Conclusion
The new super catch-up rule is a great chance to make a big difference in your retirement savings. The window is short, so you need to act soon. Here’s all you need to do in three simple steps:
- ASK: Call your HR department now and ask if the company will offer the super catch-up.
- PLAN: Look at your budget, figure out how much you can save, and calculate the new savings percentage for your paycheck.
- ACT: Before your first paycheck, go to your retirement plan’s website and update your contribution amount.