Take these steps before the year begins.
IRS increases 401(k) contribution limits for 2026
The IRS will increase 401(k) and catch-up contribution limits for 2026, allowing workers to save up to $32,500 for retirement.
The start of a new year is the perfect time to set financial goals and think about what you want to accomplish in the next 365 days. And you might have some lofty goals in mind for 2026.
Perhaps this is the year you buy a house or pay off your debts. Or maybe this is the year to make a big jump in your retirement savings.
If you want 2026 to be the year you make big strides in your IRA or 401(k), there’s one important action you should take. And you should make it right away.
Take advantage of incoming pay increases
It is common for salaries to increase with the arrival of a new year. If you get a raise in 2026, one of the best things you can do with that money is to immediately transfer it to your IRA or 401(k) plan.
why are you in a hurry? When a raise hits your paycheck, you might want to spend that money on things that make your life a little more fulfilling, like a subscription service or new apparel.
That’s completely understandable. But once you get used to a bigger paycheck, it may be harder to part with that money to save for retirement.
That’s why it’s best to automate large contributions to your retirement savings from the beginning. If you participate in a 401(k) plan at work, let your payroll department know that you’d like to increase your savings rate. If you have an IRA, set up automatic monthly contributions that reflect the amount you’d receive from a raise.
The key is to remove temptation from the table in the first place. Even if you’re not used to having extra money, don’t overlook it.
More ways to maximize your retirement savings in 2026
Banking your raise is a great way to ensure your retirement savings are in the right place in 2026, but it’s not the only thing you should do in an IRA or 401(k).
First, if you have a 401(k), find out which workplace matches you’re eligible for this year. And find a way to get that full amount so you don’t give up your free money in retirement.
Your raise may increase your contribution rate enough to claim a full 401(k) match. But if that’s not the case, you’ll want to use other strategies to land the perfect match, such as cutting back on expenses or considering a side hustle to increase your income.
You don’t want to give up on an employer match, because not only will you lose your original 401(k) withdrawals, but you’ll also lose the opportunity to invest and grow those funds.
Speaking of investing, the start of a new year is the perfect time to evaluate your portfolio and see if it’s working well for you. If you have an IRA and own individual stocks in that account, make sure your portfolio is balanced.
It’s possible that your particular stock will rise significantly in value in 2025 and now make up a large portion of your portfolio. In that case, you may need to adjust the balance to avoid investing too much in any one company.
If you have a 401(k), be aware of the investment fees you’re paying. Unlike an IRA, a 401(k) is typically restricted to a variety of funds rather than individual stocks. If you’re losing a lot of money to fees, you might want to shift away from actively managed mutual funds or target-date funds and try a low-cost broad market index fund instead.
Pay close attention to your retirement accounts
As the new year begins, it’s easy to get caught up in our busy lives. So it’s important to spend some time managing your retirement accounts early on.
If you’re getting a raise, this year is a great time to increase your savings rate. In addition to that, it’s a good time to make sure your portfolio is in place and that you’re set up to earn all the free 401(k) dollars your employer is willing to give you.
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