Elizabeth Ayoola

But on the other hand, if you were able to defer your taxes until retirement, you could potentially pay less in taxes, obviously depending on where tax rates are when you would potentially retire in some time in the future.

Are there any other downsides of this new rule that you can think about, Sean?

That's right.

Now, for people who are bummed about the recent changes and who earn close to the $150,000 cap, one of the things that come to mind that you can do is looking for ways to lower your taxable income.

You can do that through making contributions to a health savings account.

Did you guys know I love health savings accounts?

Yes, I do.

So they do have triple tax benefits, which is why I love them so much.

So you can make tax deductible contributions.

You get tax free growth and also you can make tax free withdrawals on qualified expenses.

That is a wonderful question, Sean, and I have an answer for it because I looked.

Only 16% of eligible participants, those who are 50 and older, actually made catch-up contributions to their employer-sponsored plans, according to the latest Vanguard, How America Saves 2025.

data.

Now, as you said, Sean, that's probably not shocking as a small percentage of people, that's about 14% actually max out their account anyway.

And those are the people who catch-ups might make the most sense for, honestly.

It's probably a good idea for folks to utilize these catch-up contributions if they have the means to, because it gives you a chance to bulk up your retirement savings and also capture all of those yummy benefits, whether it's a Roth or traditional retirement account.

All right, Sean, Mr. CFP, I want you to give us an example of how catch-up contributions could boost retirement savings.

Let's look at the numbers.

And I just have to say $200,000 is not small money.

I can think of 10 million or maybe 200,000 things I would do with $200,000.