Employers spent the past two years building out one of the most generous retirement savings features Congress has ever authorized. Almost nobody is using it.
Under a SECURE 2.0 provision that took full effect this year, workers aged 60 through 63 can make catch-up contributions of up to $11,250 — replacing the standard $8,000 catch-up available to savers 50 and older. Stacked on top of the 2026 elective deferral limit of $24,500, that allows an eligible worker to defer as much as $35,750 in a single year during what are typically peak earning years.
Plans Adopted It. Participants Didn't.
Plan sponsors moved quickly. Among roughly 1,300 defined contribution plans administered by Vanguard, 91% had adopted the higher catch-up limit for the 60-to-63 cohort by the end of 2025, making it the most widely embraced optional SECURE 2.0 feature.
Participant behavior tells a different story. Of eligible savers aged 60 to 63 inside those plans, 21% maxed out the standard $24,500 deferral limit, 19% made any catch-up contribution at all, 13% hit the normal catch-up ceiling — and just 9% reached the full super catch-up limit, according to figures highlighted in a July 28 analysis by 24/7 Wall St.
The pattern extends well beyond the narrow 60-to-63 window. Vanguard's How America Saves report, drawn from 4.8 million participants, found that while 98% of plans offer catch-up contributions, only 16% of eligible participants aged 50 and older actually make one.
A New Roth Complication
The window also got more complicated in January. Effective for the 2026 tax year, catch-up contributions must be made on a Roth basis for employees whose prior-year FICA wages from the same employer exceeded $150,000 — an amount indexed upward from the $145,000 written into the original legislation, per IRS Notice 2025-67. Final regulations were published September 14, 2025.
The practical effect is that higher earners lose the current-year deduction on catch-up dollars. It is the most significant structural change to catch-up rules since they were introduced in 2001. Workers whose employers have not yet added a Roth 401(k) option may be unable to make catch-up contributions at all until plan documents are updated — a deadline most sponsors face by year-end 2026.
Cash Flow, Not Apathy
The low utilization rates appear driven less by inattention than by household budgets. The U.S. personal savings rate fell to 3.9% in the first quarter of 2026 from 5.2% a year earlier. Vanguard separately reported that a record 6% of participants took hardship withdrawals in 2025 — up from 5%, a sixth consecutive annual increase and roughly triple the pre-pandemic rate. About 36% of those withdrawals went to avoiding foreclosure or eviction and 31% to medical expenses.
The divergence is stark against headline savings data. Fidelity's Q1 2026 analysis showed the combined 401(k) savings rate hitting a record 14.4%, with the average balance at $141,000 as of March 31 — down 4% for the quarter but up 11% year over year. Average balances for participants aged 60 to 64 stood at $246,500.
For savers who can fund it, the four-year super catch-up window remains among the most powerful tools available to close a late-career shortfall. The data suggests most eligible workers will let it pass.
Sources: Vanguard How America Saves 2026; 24/7 Wall St. (July 28, 2026); PLANSPONSOR; Internal Revenue Service (Notice 2025-67 and 2026 contribution limit guidance); Fidelity Q1 2026 Retirement Analysis; Bureau of Economic Analysis personal savings data.