To maintain a comfortable lifestyle in retirement, you often need to save or access income other than Social Security.

Today, the typical retired worker receives a Social Security benefit of only around $1,922 per month; This means an annual income of approximately $23,000. This may be just enough to get by; But forget about having money for extras like hobbies, travel and entertainment.

Now you have options when it comes to saving for retirement. You can attend an event retirement plan It is supported by your employer. But if such a plan is not available to you, Individual retirement account (IRA) may be your next best bet.

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The IRS just announced 2025 IRA contribution limits. So if you’re someone looking to max out your IRA, you’ll want to pay attention to this.

IRA limits don’t change in 2025

Currently, IRA contributions reach $7,000 for workers under 50 and $8,000 for those 50 and older. These limits will remain the same in 2025.

You may find this surprising if you are aware that it is. SECURE 2.0 Act of 2022 Annual cost-of-living adjustments allowed for IRA catch-up contributions. But remember this: Just because of this catch-up limit to be increasing does not mean that will is increasing every year. Therefore, it remains stable at $1,000 for 2025.

There are benefits to funding an IRA for retirement

One disadvantage of IRAs is that they have much lower contribution limits than 401(k)s. Next year, 401(k)s will be $23,500 for savers under age 50 and $31,000 for savers age 50 and over. Additionally, many employers offer 401(k) matches that help employees increase their savings.

But that doesn’t mean you won’t enjoy your share of IRA privileges. First, if you fund a traditional IRA, your contributions may shelter some of your income from taxes. Additionally, IRAs offer some significant advantages over 401(k)s.

First, you can open an IRA at any financial institution that offers IRAs. This gives you the opportunity to find a retirement plan that works for you. With a 401(k), you are limited to the plan your employer offers.

Second, while IRAs let you hand-select stocks for your investment portfolio, 401(k) plans typically limit you to fund selection. This freedom of choice is advantageous for several reasons.

Not only do you have complete control over the assets you put your money into, but some 401(k) funds charge exorbitant fees (known as expense ratios) that can seriously eat into returns. With an IRA, you can take steps to avoid hefty investment fees and build a portfolio that has the potential to generate returns that outpace the returns of the stock market as a whole.

It may be disappointing to hear that IRA limits won’t increase in 2025. But you can still do great things for your retirement by maxing out in the new year.

And remember: You don’t have to limit your retirement savings to $7,000 or $8,000 in 2025. Once you’ve maxed out your IRA, you can look to other accounts, such as health savings accounts, for retirement savings purposes (HSAs) or even a taxable brokerage account.