• More than half of American workers feel they are behind on retirement savings, according to a Bankrate survey that polled 2,445 U.S. adults in August.
• For 2025, employees can defer $23,500 into 401(k) plans, plus an extra $7,500 for those age 50 and older.
• But the catch-up contribution limit rises to $11,250 for those age 60 to 63 in 2025, thanks to a change from Secure 2.0.

If you're ready to focus on retirement in 2025, early January could be the perfect time to boost your 401(k) plan contributions, financial experts say. 

More than half of American workers feel they are behind on retirement savings, according to a Bankrate survey that polled 2,445 U.S. adults in August.

But starting in 2025, your 401(k) plan has a higher contribution limit — and a special catch-up for older investors — that could help grow your nest egg.

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For 2025, you can defer $23,500 into your 401(k) plan, up from $23,000 in 2024. Investors age 50 and older can make catch-up contributions of $7,500 on top of the $23,500 limit.

Typically, it takes a couple of paychecks for 401(k) deferral changes to go into effect, according to Boston-area certified financial planner Catherine Valega, founder of Green Bee Advisory.

Boosting your contribution to max out deferrals can be easier earlier in the year because the higher percentage is spread across more paychecks.

"Be aggressive with your investments, especially if you have decades until retirement," said Valega, who urges clients to max out their 401(k) plans if possible.

Starting in 2025, there's also a special catch-up limit for investors age 60 to 63, thanks to a change enacted via Secure 2.0. Instead of $7,500, this group can save $11,250 for catch-up contributions, which brings their total deferral limit to $34,750 for 2025. 

Invest 'as much as you feel comfortable'

While many investors aim to max out 401(k) deferrals, it can be difficult with other short-term goals, like paying off debt or buying a home.

To that point, roughly 14% of employees maxed out 401(k) plans in 2023, according to a 2024 Vanguard report, based on data from 1,500 qualified plans and nearly 5 million participants.

Max contributors were typically older, with higher income and a longer tenure with their current employer, the report found.  

Ultimately, you should defer "as much as you feel comfortable" not tapping until retirement, said CFP George Gagliardi, founder of Coromandel Wealth Strategies in Lexington, Massachusetts. Otherwise, you could owe a 10% penalty and taxes for early withdrawals, with some exceptions.     

Plus, you need a "sufficient emergency fund" outside of your retirement savings, he said. 

Typically, experts recommend a minimum of three to six months of expenses for an emergency fund, depending on your family's circumstances.