Retirement Retirement Planning

2026’s 401(k) Reality Check: Why Maxing Out Might Not Be Possible Anymore

New laws, economic fears, and pesky inflation are to blame.

By Catherine Collins

Edited by Laura Hohenstein

Updated Dec. 15, 2025

The IRS recently increased 401(k) contribution limits to $24,500 a year for employees under 50 and to $32,500 a year for those over 50 who want to catch up. Typically, when the IRS increases retirement account limits, many people feel excited about the possibility of saving and investing more in their future.

However, as we head into 2026, many people feel they won't be able to max out their retirement accounts. Here are some of the reasons why, along with several tips for people who want to find a way to invest more and enjoy a stress-free retirement.

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Rising living costs

The primary reason why many people will struggle to max out their retirement accounts is increased living costs. According to the Bureau of Labor Statistics, grocery prices have risen 2.7% in the last year. Energy prices are up 2.8% from last year, and used vehicle prices are up 5.1%.

When people feel the weight of rising daily living costs, they're much less likely to increase their retirement account contributions.

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Economic uncertainty

The stock market had highs and lows in 2025, most notably with a large drop in April. According to a Schwab investment survey, 23% of 401(k) holders adjusted their asset allocations in response to market volatility.

That's because economic uncertainty leads to investor uncertainty. And when investors adjust portfolios to be more conservative, it can limit their long-term return potential, depending on their age. It can also hinder new contributions to these accounts.

Employer match is not keeping pace

Due to numerous factors, including tariffs, price increases, and higher expenses, many businesses may change their employer contribution policies.

Companies might reduce employee headcount or adjust employee match benefits to minimize costs. Some employers that had a match might switch to a discretionary match system. If employers choose this route, it can have a detrimental effect on people's ability to contribute a large amount to their 401(k)s in 2026.

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Secure 2.0 Act

In 2026, employers will have to implement part of the Secure 2.0 Act, which changed catch-up contributions for high earners over age 50. Employees who earn more than $150,000 must make all catch-up contributions as Roth contributions, which limits the immediate tax benefits for many workers.

Previously, the ability to lower tax bills was a significant reason many employees made catch-up contributions. With the new changes, some high earners might seek other ways to reduce their tax bill.

Too many eggs in one basket

Because many investors saw their retirement account totals fluctuate in 2025, many are hesitant to put all of their eggs in one basket in 2026.

Some employees may diversify their investments across different asset classes rather than invest solely in a 401(k). After all, a 401(k) was not meant to be the only retirement account available for long-term financial planning.

Instead, it's meant to be one of several income streams for retirees. For example, investors can also have an IRA, an HSA, a regular brokerage account, real estate, and other assets.

Wage growth doesn't match inflation

Finally, the most recent Real Earnings News Release from the U.S. Bureau of Labor Statistics reports that wages rose 3.8% over the past year. On the other hand, the Consumer Price Index rose 2.9%.

That means that even if someone earns higher pay, it won't feel like they have more spending power, as consumer wages are just barely outpacing inflation. So, many households won't create enough extra income to maximize their 401(k) contributions in 2026.

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Steps to take if you can't max out your retirement account

Meet with a financial advisor

Meeting with the financial advisor is a good way to ensure that you have a plan for some of life's most significant milestones, including retirement, your children's college education, and more. Your advisor can let you know whether or not you're on track for retirement.

Adjust your retirement timeline

Although it's a challenging decision, be open to adjusting your retirement timeline. Contributing less now might mean you have to work a few more years, but it might be worth it for greater security and cash flow during more turbulent economic times.

Supplement retirement income

It's becoming more popular to supplement retirement income. Many people start a side business to add to their retirement income or work part-time. While it may not be the retirement you imagined, working some could provide relief from working full-time in a stressful environment while still giving you some additional cash flow.

Bottom line

Many workers will not be able to max out their retirement accounts in 2026 for a variety of economic reasons. However, that doesn't mean people won't be able to retire. Remaining adaptable and being open to redefining your retirement plan will be the key to creating a meaningful life once your full-time working years are behind you.

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