The main new law affecting retirement plans is the SECURE 2.0 Act of 2022, phasing in changes like higher catch-up contribution limits for ages 60-63, mandatory auto-enrollment for new plans (phasing in 2025/2026), and delaying Required Minimum Distributions (RMDs) to age 73, with future increases to age 75. For 2026, contribution limits are increasing, with specific rules for high earners' Roth catch-ups, while the full Social Security retirement age also rises to 67 for those born after 1960.
Highlights of changes for 2026
The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government's Thrift Savings Plan is increased to $24,500, up from $23,500 for 2025. The limit on annual contributions to an IRA is increased to $7,500 from $7,000.
New retirement plan rules for 2025, largely from the SECURE 2.0 Act, include mandatory auto-enrollment for new 401(k)s, increased catch-up contributions for ages 60-63 (to $11,250), extended eligibility for part-time workers, and the introduction of employer matching for student loan payments, plus upcoming Roth-only catch-ups for high earners starting in 2026. These changes aim to boost savings, expand access, and offer new ways to save, impacting both employees and employers significantly.
The SECURE 2.0 RMD rules raise the starting age for required minimum distributions (RMDs) from traditional IRAs and employer sponsored retirement plans from 72 to 73. In 2033, the starting age will increase from 73 to 75.
For 2026, 401(k) investors under 50 can contribute $24,500 to their company plans, plus $8,000 in catch-up contributions if they're over 50, for a total of $32,500. In addition, people age 60 to 63 can make “super-catch-up” contributions: $11,250 on top of $24,500.
People who turned 65 by Dec. 31, 2025, are eligible for the new deduction, according to the IRS. The deduction provides $6,000 for each qualifying individual, or $12,000 for married couples who both qualify. The tax break is subject to income limits.
The $1,000 a month rule is a retirement guideline suggesting you need about $240,000 saved for every $1,000 per month in desired income, based on a 5% annual withdrawal rate (5% of $240k is $12k/year, or $1k/month). It's a simple way to set savings goals, but it doesn't account for inflation, taxes, or other income like Social Security, so it's best used as a starting point, not a complete plan.
The bill extends Trump-era tax cuts, raises standard deductions, and adds a new “Senior Bonus Deduction” for retirees age 65 and older. Social Security remains taxable, while SALT deduction limits are temporarily increased and still subject to income phase-outs.
Yes, Social Security benefits will get a raise in 2026, with a 2.8% Cost-of-Living Adjustment (COLA), resulting in an average monthly increase of about $56 for retirees, bringing the average payment to around $2,064, starting with January 2026 payments. This adjustment is designed to help benefits keep pace with inflation, though higher Medicare Part B premiums might offset some of the increase for many beneficiaries.
Pensions
As announced at Autumn Budget 2025, the government is changing how salary sacrifice for pension contributions works. From April 2029, the amount that is exempt from National Insurance contributions (NICs) will be capped at £2,000 a year for employee contributions made via salary sacrifice.
The extra $144 added to Social Security usually comes from the Medicare Part B Giveback benefit, offered by some Medicare Advantage (Part C) plans, which pays back some or all your Part B premium, showing up as extra money in your check if it's deducted from your Social Security. To qualify, you need Original Medicare (Parts A & B), pay your own Part B premium, live in a plan's service area, and enroll in a specific Medicare Advantage plan that offers this "rebate," with the amount varying by plan and location.
What can I claim if I am over State Pension age or if I have a partner over State Pension age?
The new senior tax deduction of up to $6,000 for single filers and $12,000 for joint filers, was created to help cover taxes on Social Security benefits. Taking the new senior deduction helps to reduce your taxable income, which can mean less tax or potentially an even bigger tax refund when you file your return.
For tax year 2025, seniors over 65 get a significant new $6,000 extra standard deduction (or $12,000 for joint filers) under the temporary One, Big, Beautiful Bill (OBBB), effective 2025-2028, phased out at higher incomes ($75k single / $150k joint MAGI). This is in addition to the existing modest age-based increase (around $2,000 for single, $1,600 per spouse for married).
Average 401(k) balance for 70s – $425,589; median – $92,225
The average age to retire is 65 for men and 63 for women, so it's not surprising to see the average and median 401(k) balance figures start to decline in people's 70s as people start withdrawing from their accounts.