How Older Railroaders Can Catch Up Before Railroad Retirement

Welcome to another edition of the Highball Advisors Railroad Retirement Whiteboard! I'm John McNamara from Highball Advisors, and today we're discussing how railroaders can maximize their savings before retirement, particularly with recent changes to 401k contribution limits.

In 2022, the SECURE Act 2.0 was enacted, and some of its provisions are rolling out in 2025. One of the key changes? Higher 401k contribution limits, especially for those nearing retirement.

Let’s break it down:

• For railroaders under 50, the annual contribution limit for 2025 will be $23,500.
• For those 50 and older, the limit increases by an additional $7,500, bringing the total to $31,000.
• New for 2025, those between 60 and 63 can contribute an extra $11,250, which is a significant benefit for those close to retirement.

The message here is clear: start saving for retirement. We know many rely on Social Security, but it's no secret that the system is facing challenges. This opportunity is a great way to boost your savings before retirement, especially since once you’re retired, you’ll shift from accumulating savings to decumulating, or spending your retirement funds.

Here’s an important detail: you must reach age 60 by the end of 2025 to take advantage of the extra deferrals. For example, if you're 59 but turn 60 later in the year, you can still contribute the higher amounts. So, let’s say a railroader was born on December 1st, 1965 – in 2025, they can contribute up to $34,750, which is a substantial sum!

This is a great opportunity for railroaders who are close to retirement, especially if you're thinking about leaving the workforce around age 60. Take full advantage of these contribution limits in those final years before you retire.

So, share this information with other railroaders, and feel free to subscribe to my channel for more updates. If you're at or near retirement, be sure to check out my “Boarding for Railroad Retirement” process to get a clear picture of your retirement income.

Until next time, railroaders – stay safe, stay on track, and take care!

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.