Each new year marks another year closer to retirement. That may feel exciting, but it can also feel daunting — especially if you’re not sure you have enough saved up to stop working.
The sooner you step up your savings, the better your chances of having an adequate nest egg waiting for you by the time you’re ready to hang up your hat. Thanks to compound interest, “your retirement savings can grow by generating earnings on both your original contributions and the accumulated interest over time,” said SmartAsset, a personal finance website. This means that the “earlier you start saving, the more time your money will have to grow.”
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Aim for the updated contribution limits
The maximum amount you can contribute to your 401(k) is inching up next year, thanks to updated contribution limits. For 2026, you can put as much as $24,500 into a tax-advantaged retirement plan — a $1,000 increase over 2025 limits. If you have an IRA, you can contribute up to $7,500 to it in 2026.
“Of course, many workers are nowhere close to reaching the savings max,” with only “some 14%” hitting the upper limit, said The Washington Post, citing data from Vanguard. Still, rather than feel discouraged, think of it as growing room for your savings rate. How much closer can you get to that target next year?
Maximize your employer match
Another incentive to bump up your savings rate if you have an employer-sponsored retirement plan: the employer match, which is where your employer contributes a certain percentage of the amount you put into your plan. This could also offer a more attainable savings target to make sure you are hitting. Assuming your employer offers a match, “try to invest at least enough to get any match,” as “that’s like free money, and it can significantly boost your own saving efforts along the way,” said Fidelity.
While the very concept of extra money may sound far-fetched, if you stop to think about it, you might be surprised by how much excess you find in your monthly spending habits. “To find more room in your budget for saving, look for expenses that could be reduced or eliminated” and then redirect that amount toward your retirement account, said U.S. News & World Report.
You could also commit to putting any little windfalls that come your way during the year toward your retirement. For instance, if you get a tax refund, you could divert those funds. Same goes for “if you receive a bonus, inheritance, prize money or other windfall of cash,” said U.S. News & World Report.