Starting in 2026, Americans can contribute more to retirement accounts, with the 401(k) cap rising to $24,500. However, higher limits only help if basics like emergency savings and high-interest debts are covered. Last year, only 14% of Vanguard plan participants maxed out contributions.

401(k), 403(b), and other plans see contribution cap increases. Those 50+ can add an extra $8,000. IRAs also see a limit increase to $7,500. High earners 50+ with certain incomes must contribute to a Roth 401(k).

While higher contribution limits are appealing, most Americans struggle with day-to-day expenses. Strategies include building emergency funds, paying off high-interest debt, and gradually increasing contributions. Early withdrawals can have penalties, so staying invested and growing emergency savings are crucial.

The key to maximizing higher limits is timing and financial stability. Consider building a buffer, managing debt, and gradually increasing contributions. Consult a financial advisor to tailor strategies to your situation for long-term financial security.

Read more at Yahoo Finance: Contribution limits for 401(k)s, IRAs are going up in 2026, but most Americans can’t reach them. Can you afford it?