Whether you’re close to retiring or it’s still years away, boosting your 401(k) balance significantly contributes to your long-term financial security. Yet, many find this challenging—limited extra funds and complicated 401(k) rules can make it hard to know where to start.

If you’re keen to grow your 401(k) savings in 2025, consider the three strategies below as a starting point.

1. Take Advantage of Employer 401(k) Matching

While not every employer offers a 401(k) match, if yours does, it should be your first savings priority. You might choose to bypass this if you can’t afford to contribute or if you’re not vested and plan to leave before becoming fully eligible.

Matching contributions can add thousands to your retirement savings. For instance, if your employer matches dollar-for-dollar for the first 3% of your salary, and then a $0.50 for every dollar up to 2%, you could potentially secure an additional $2,400 in retirement funds, assuming a $60,000 salary, along with your personal contribution of $3,000.

This matched amount could grow impressively over time. For example, an initial $2,400 received from your employer could grow to more than $11,186 with an average annual return of 8% over 20 years. By consistently taking advantage of employer matches, you might accumulate six figures in matched funds and their earnings by retirement age.

2. Assess and Update Your Investment Choices

Another straightforward way to grow your 401(k) is to reassess your investment selections. The goal is to balance risk while maximizing potential returns. This also includes being mindful of investment fees.

Typically, 401(k)s have a limited range of investment options, primarily offering mutual funds chosen by your employer. Often, you will encounter target-date funds, which change their asset allocation based on the expected retirement date. While they tend to be suitable for hands-off investors, they can come with high fees.

An alternative could be index funds, which consist of numerous investments designed to reflect a market index like the S&P 500. These funds usually have lower fees and allow for broad diversification with a single investment.

3. Utilize Catch-Up Contributions if You Qualify

Individuals aged 50 and older can make additional “catch-up” contributions to their 401(k)s on top of the standard limits. However, this strategy requires available funds for extra contributions, but it can significantly enhance your savings trajectory.

For 2025, those under 50 can contribute up to $23,500 to their 401(k), while individuals between 50 and 59 and those aged 64 and older can contribute up to $31,000. People aged 60 to 63 by the end of the year may increase this limit to $34,750.

No special actions are required for catch-up contributions; you simply continue to direct funds into your 401(k) as usual. However, remember not to exceed the contribution limits to avoid penalties.

New Year is an ideal moment to review and revise your 401(k) but do not limit this review to just once a year. It’s wise to assess your investments regularly, especially after significant life changes, such as welcoming a new child or switching jobs. Small adjustments now can prevent scrambling for larger changes right before retirement.

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