Key Takeaways
- A 59-year-old caller told Dave Ramsey on Nov. 6 that he and his wife are debt free but have nothing saved for retirement, and Ramsey said that starting point scares him.
- This year’s 401(k) limit is $32,500 for savers 50 and older and $35,750 for workers who turn 60 through 63, who get a bigger $11,250 catch-up.
- At this year’s limits, one worker could put $175,500 into a 401(k) over the five years from 59 through 63, plus $8,600 a year in an IRA.
- The bigger catch-up covers the whole calendar year a worker turns 60, and the limits leave far more room than the $2,000 to $2,500 a month Ramsey talked about.
If you’re in your late 50s and way behind on retirement savings, the tax code has some genuinely good news for you. From 60 through 63, the IRS lets you put more into a 401(k) than at any other age.
That’s a big deal for a caller on The Ramsey Show on Nov. 6. He’s 59, and he and his wife just finished paying off everything they owe, house included. “We ate ramen noodles. We drove beaters with heaters,” he told Dave Ramsey. That left them debt free on $120,000 a year of household income, with nothing saved for retirement or anything else.
Ramsey’s scared, and he’s got a point
Ramsey didn’t sugarcoat it: “right now you call up and you say I’m 59, I have zero money, that scares the crud out of me.” Then he got to work on the fix. He figured the couple could easily save $2,000 a month on that income. And he said that running scenarios, like $2,500 a month for 10 years growing to about half a million dollars, is what gives a late starter hope.
Nobody wants to start from $0 at 59, so the alarm is fair. But the caller never said whether he has a 401(k) at work, and at his age that detail is worth the most money. So let’s say he does, and see how much this year’s rules let him put away.
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Turn 60, and the limit jumps
The 2026 limit on what a worker can defer into a 401(k) is $24,500. From 50, savers can add an $8,000 catch-up, for $32,500 a year. Workers who turn 60, 61, 62 or 63 during the year get a bigger $11,250 catch-up instead, which takes their limit to $35,750, and at 64 it drops back to the regular $8,000. The bigger catch-up is for workplace plans only: an IRA stays at $7,500, plus a $1,100 catch-up from 50, for $8,600.
The bigger catch-up goes by the age a worker turns in the calendar year, so the caller doesn’t have to wait for his 60th birthday. If it falls anytime next year, all of next year counts. (And if he turns 60 before New Year’s, he already qualifies for 2026.)
Five years at the max comes to $175,500
Run this year’s limits across the five years from 59 through 63, and the 401(k) alone has room for $175,500: $32,500 for the year at 59, plus $35,750 for each of the four years from 60 through 63. Add $8,600 a year in an IRA, and that’s $218,500 between the two accounts over five years. The IRS adjusts these limits for inflation, so later years’ figures could be higher still.
In Ramsey’s terms, $35,750 a year is about $3,000 a month. His $2,500 a month comes to $30,000 a year, which fits inside one 401(k) at 59 before the caller puts a dollar into an IRA. And his wife has nothing saved either, so if she has a plan at work, she gets her own limits on top of his.
Filling it takes a big budget
Of course, maxing out both accounts at 60 means saving $44,350 a year between the 401(k) and the IRA, more than a third of the couple’s $120,000 income before taxes. Few households can do that, even with no mortgage. But this couple spent years sending all their disposable income to their credit cards and mortgage, and now that money has nowhere else to go.
Deferrals come out of paychecks, so with 2026 nearly over, next year is the first full year he can fill. He’d sign up through payroll at work and pick a dollar amount or a share of each check. Ramsey also pointed him to Roth IRAs, and those fall under the same $8,600 IRA limit for savers 50 and older.
Plenty of runway
Frankly, I’m a little less scared than Ramsey. A debt-free couple with a paid-off house and $120,000 of income has more room to save than most people starting at 59, and he’s about to spend five years at the highest limits the law allows. I’d aim well past $2,000 a month, toward that $35,750 if the budget can take it.
The IRS put out this year’s limits on Nov. 13 last year, so 2027’s should be out within weeks. Any inflation bump would give the caller even more room next year.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
