Family Wealth blog

Bridging the Retirement Gap

A model bridge has a big gap in the middle, supported by a giant stack of one-hundred-dollar bills. The title reads Bridging the Retirement Gap

The prospect of retirement is a time that many look forward to, envisioning a period of relaxation and enjoyment after years of hard work. However, a recent report from the Congressional Research Service1 has shed light on a concerning reality: a significant majority of individuals are not saving enough for their retirement.

In fact, according to the report, a mere 8.5% of those contributing to a retirement account managed to reach the maximum allowable limit, indicating a widespread struggle to prepare adequately for the future. To address this gap, the IRS has established new limits that aim to encourage adequate planning and boost participation in retirement plans. Now, retirement plans aren’t the only factors in bridging retirements that are getting longer and longer all the time. But since they often play a significant role, we thought these recent changes deserved a look.

The New Limits

The IRS has announced increased contribution limits for 2024.2 Workers can now contribute up to $23,000 annually to their 401(k) accounts, a $500 rise from the previous year. This adjustment also applies to other retirement plans, including 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plan.

While these changes aim to boost retirement savings, the core challenge remains: many are not fully utilizing existing contribution limits. It’s one thing to say “the sky’s the limit,” it’s another thing to convince more people that it’s worth it to actually reach a bit higher toward the sky.

Catch-Up Contributions

The catch-up contribution limit for individuals aged 50 and above participating in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has been raised to $7,500, up from $6,500. Consequently, individuals aged 50 and older contributing to 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan can now contribute up to $30,000, effective from 2023. This provision recognizes the financial hurdles that individuals encounter as they approach retirement age, allowing them to bolster their savings in the later stages of their careers. Additionally, the catch-up contribution limit for individuals aged 50 and above participating in SIMPLE plans3 has been increased to $3,500, up from $3,000.

Expanding Opportunities with IRAs

The changes introduced by the IRS are not limited to workplace-sponsored retirement plans. Individual Retirement Accounts (IRAs) are also seeing increased contribution limits, with the cap raised to $7,000 for 2024, up from $6,500 in 2022. While this expansion provides more opportunities for individuals to save independently, it’s crucial to note that the catch-up contribution limit for IRAs remains at $1,000.

In addition, the income ranges determining eligibility for deductible contributions to traditional Individual Retirement Arrangements (IRAs), contributions to Roth IRAs, and eligibility for claiming the Saver’s Credit have all seen an increase for the year 2023. But, again, there are restrictions and conditions that are very specific to individual situations—too complex to go into here.

A Complex Bridge

As you might expect, there are multiple variables that impact one’s options for making retirement fund contributions. We’re not in the business of making people’s eyes spin—we’ll leave that up to the authors of the IRS rules. For now, let’s just say this: If you’ve started to suspect that you’re leaving retirement money on the table when it might be better off adding to a retirement plan, it’s best to talk with your tax professional and financial advisor.

Perhaps even more important, your IRAs are only part of your retirement planning. As you’re likely already aware, the average length of a retirement is now thirty years. Bridging any financing gaps for three decades—even for those who already have substantial wealth—will require some excellent investment and overall retirement planning as well.

The Takeaway

The IRS is working to help people save more for retirement by changing the limits on how much you can put into your retirement accounts. But it’s still important for each person to plan for their future. Saving for retirement can be complex, and investing wisely in all the years leading up to retirement can make a huge difference in the level of savings as well.

Make sure to take a long-term approach to both investing and saving. Not only will this help you avoid making rash decisions such as overreacting to normal market swings, it will help you appreciate the deliberate pacing it will take to bridge a long and enjoyable retirement.





Planning to Bridge the Retirement Savings Gap: New IRS limits aim to encourage adequate planning and boost participation; Copyright © 2023 FMeX. All rights reserved. Distributed by Financial Media Exchange.

Disclosure: This information is for educational and informative purposes and shall not be considered a specific recommendation. Readers are advised to speak with their advisor at JL Bainbridge to determine their specific recommendations that meet their investment objectives and to review their portfolios. The material being provided is thought to be accurate. However, the information is compiled from multiple resources and may become outdated or otherwise rendered incorrect by new research or corrections without notice. J.L. Bainbridge & Co., Inc., is not a broker dealer and does not offer tax or legal advice. Please consult your tax or legal advisor for assistance regarding your individual situation. It should neither be assumed that future results will be as profitable or that a loss could not be incurred. For more information related to our firm, please see our disclosure brochures at and

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