The last thing you’re going to want to do in retirement is rely too heavily on Social Security to cover your living expenses. For one thing, those benefits will only replace a fraction of your pre-retirement income — about 40% of it, on average.

Even more troubling, there’s a Social Security funding crisis looming on the horizon, and if Congress fails to address it, the program may have to start cutting benefits in less than a decade. Either way, counting on those checks to meet most of your financial needs in your senior years could sorely backfire on you.

A better bet would be to invest for retirement on your own so you’ll have a solid nest egg to fall back on. And if you have access to a 401(k) plan through your employer, it usually pays to take advantage of it.

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In fact, the IRS just announced what 2025’s 401(k) contribution limits will look like. And if you’re someone who’s committed to saving and investing as much as possible for retirement, you’ll want to pay attention.

You can save more in your 401(k) in 2025

This year, 401(k) contributions max out at $23,000 for workers under 50. In 2025, that limit will rise to $23,500, so you’ll be able to squeeze a little extra money into your employer-sponsored retirement plan.

However, the limit for “catch-up contributions” — currently $7,500 — is staying the same in 2025. You’re eligible to make catch-up contributions to your 401(k) once you’re 50 or older. So if you’re at least 50 now or will turn 50 in 2025, the maximum amount you’ll be eligible to put into your 401(k) is $31,000.

Should you max out your 401(k) in 2025?

If your employer offers to match some fraction of your contributions to your 401(k), it definitely pays to put enough money into it every year to snag the maximum amount of matching funds you can get — whatever that sum amounts to. But whether it pays to try to max out your 401(k), or fund it beyond your employer match, will depend in part on your plan itself.

One drawback of 401(k)s is that the companies that manage them can charge costly administrative fees that eat away at your returns. If you’re paying more than 1% per year in administrative fees, that’s high. And in that case, you may want to limit your 2025 contributions to the amount needed to claim your employer match in full. Then, if you have money beyond that to put aside for retirement, invest it through other types of accounts.

Another issue with 401(k)s is that most of them don’t allow you to hand-pick stocks like IRAs do. You are limited to a fairly small menu of mutual fund and exchange-traded fund choices made by your employer and the 401(k) manager. That might limit your ability to grow your money. And it also might mean being forced to load up on funds that charge their own excessive fees. That said, you can typically keep investment fees to a minimum in a 401(k) by choosing passively managed index funds over actively managed funds.

Of course, if you’re happy with your 401(k) and have the financial ability to max out your contributions in 2025, then by all means, do so. The more you save for retirement in the near term, the less financial stress you’re likely to have down the line.

Plus, with traditional 401(k) plans, the money you contribute is deducted from your taxable income in the year that you contribute it. And that’s important, because in 2025, the wage cap for Social Security tax purposes is rising from $168,600 to $176,100. If you’re a higher earner, you may be looking at a modestly higher tax burden next year. Maxing out your 401(k) could be a good way to help offset that hit.

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