Are Catch-Up Contributions Worth It?

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Oh wow, I just realized that I can make catch-up contributions this year. Yes, I’m turning 50! Ugh, I feel old. My neck is sore and my lower back is hurting. I’m taking 3 pills every day. The doctors always want to prescribe more whenever I go in for an annual checkup. It’s no fun getting old. But the alternative is worse. I guess I can’t complain.

Anyway, are catch-up contributions worth it? Let’s see what the catch-up contributions and limits are in 2023. Then we’ll see if it makes sense to contribute extra.  

Catch-up Contributions

For 2023, workers can contribute $22,500 to your 401k plan. If you’re 50 or older, you can add up to $7,500 in catch-up contributions. That raises your max contributions to $30,000 per year. That’s a lot of money to put away.

I just updated my numbers in this post – What If You Always Maxed Out Your 401k? Check it out if you haven’t seen it. Maxing out your 401k every year is the easiest way to become a millionaire. According to my chart, you should be a 401k millionaire by now if you contributed the max for 21 years.

The other part of catch-up contributions is for the Roth IRA. For 2023, you can contribute $6,500 to the Roth IRA. If you’re 50 or older, you can add up to $1,000 in catch-up contributions.

Is it worth it?

Is it worth it to contribute extra? The answer is as usual – it depends.

If you’re earning a lot of money and don’t plan to retire anytime soon, it’s probably a good idea to save extra. Many workers are entering their peak earning years in their 50s. Saving more will prevent you from inflating your lifestyle too much. Also, many workers put off saving for retirement until they’re older. For those people, it’s worth it to take advantage of the catch-up contributions.


However, it’s a bit more complicated for people who want to retire early. I’ve been maxing out my 401k contributions for many years. Today, my 401k is worth about $900,000. That’s down a bit from the high at the beginning of 2022. I’m not a 401k millionaire anymore, but it’s still a good size retirement portfolio.

Here are the reasons why I won’t make catch-up contributions to my 401k.

  • Accessibility – I want to save more in my taxable account so I can access the fund easily.
  • Enough retirement funds – At this point, I have enough in my 401k. If I leave it alone for 10 years, it should compound nicely. The catch-up contributions won’t make a huge difference.  
  • RMD – At some point, we’ll have to worry about the Required Minimum Distribution. A big 401k account would be a headache then.
  • Earned income – Most importantly, I probably won’t make enough income to contribute $30,000 to my 401k this year. Over the last few years, my blog income has been decreasing. Unless I find a good side gig, my contribution will be limited by my lower income.

However, the Roth IRA is another story. I’ll make catch-up contributions to my favorite retirement account. It’s only $1,000 extra and any earnings will be tax-free. I won’t miss out on that.


From what I read, the catch-up contributions will be indexed to inflation in 2025. That’s great. Savers will be able to save more for retirement.

What about you? Do you think catch-up contributions are worth it? It probably isn’t a good fit for most people in the FIRE movement. We need to access our investment earlier. Besides, we already saved up plenty before we’re 50. Right?

*Passive income is the key to early retirement. These days, I’m investing in commercial properties with CrowdStreet. They have many projects across the United States. It’s been working so well that I’m planning to sell our rental condo so I can invest more. Go check them out!

Disclosure: We may receive a referral fee if you purchase or signup for a service through the links on this page.

Image credit: Paola Aguila

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.

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