In my mad dash to catch up on blog posts after my vacation, I read one post (not 100% sure where) about changes to retirement contributions, starting in 2026.
Apparently, it’s now time to deal with Secure 2.0, which requires that “catch-up contributions” for retirement made by high-earners be post-tax.
What does that mean for me?
Since I will be over age 50, but under age 60, I can contribute an extra $8000 to my 403(b) retirement account in 2026.
However, if my annual income is over $145,000 a year, that $8000 extra contribution cannot be to my pre-tax 403(b). It has to go to a post-tax (Roth) 403(b). Assuming my employer offers one (it does).
What else does that mean for me?
Depending on my marginal tax rate, I will be paying taxes on that $8000 that I didn’t have to pay before. I will likely be seeing another $1600 to $2000 a year come out of my paycheck–since I am paid monthly, that’s $133 to $167 per month.
What else does this change mean for me?
Because I’m paying those taxes now, I get a new retirement account (oh boy, more accounts!). However, when I want to use that money, I don’t pay taxes on it again. That might be nice.
How does this change my plans?
Since–I am mostly sure–I have hit “my number,” in theory I don’t need to save any more money for retirement.
Compared to 2025, in 2026 I can contribute an extra $1000 to the pretax portion of my 403(b), plus an extra $500 for the catch up portion. Between that and the extra taxes, my paycheck will likely drop by roughly $250 per month.
Especially since I took a pay cut this summer, I may find contributing to retirement funds on an after tax basis reduces my take home pay a bit too much.
On the other hand, money is fungible.
I could top up my retirement accounts, and use some of the investment account money now to smooth over any expenses I have before I stop work altogether.
Or, I could contribute to my retirement account(s), but not max them out, and enjoy some of the extra money as I work on enjoying the money I am trading time for.
Happily, I can change my mind and my retirement contributions at pretty much any time over the year, so I can be flexible about this.
What would you do? Or, what did you do, if you worked longer than financially necessary?