To maintain a comfortable lifestyle in retirement, you generally need to save or have access to non-social security income.

The typical retired worker today collects a Social Security benefit of only about $1,922 per month, which translates to an annual income of about $23,000. That may be enough to get by, but forget about having money for extras like hobbies, travel, and entertainment.

Now, when it comes to saving for retirement, you have choices. You could participate in a retirement plan sponsored by your employer. But if such a plan is not available to you, a individual retirement account (IRA) maybe your next best bet.

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The IRS just announced IRA contribution limits for 2025. So if you’re someone aiming to max out your IRA, you’ll want to pay attention.

IRA limits not changing in 2025

Currently, IRA contributions are a maximum of $7,000 for workers under 50 and $8,000 for those 50 or older. In 2025, these limits remain the same.

This might surprise you if you know that SECURE 2.0 Act of 2022 allowed for an annual cost-of-living adjustment to IRA catch-up contributions. But remember: just because this catch-up limit can the increase does not mean that will increase every year. As such, it remains at $1,000 for 2025.

There are benefits to funding an IRA for retirement

One disadvantage of IRAs is that they have much lower contribution limits than 401(k)s. Next year, 401(k)s will max out at $23,500 for savers under 50 and $31,000 for those 50 or older. Additionally, many employers offer 401(k) matches that help workers increase their savings.

But that doesn’t mean you won’t get your share of benefits in an IRA. On the one hand, if you fund a traditional IRA, your contributions can protect part of your income from taxes. Additionally, IRAs offer key advantages over 401(k)s.

First, you can open an IRA at any financial institution that offers one. This gives you the opportunity to shop around to find a retirement plan that’s right for you. With a 401(k), you are limited to the plan offered by your employer.

Second, IRAs allow you to manually select stocks for your investment portfolio, whereas 401(k) plans generally limit you to a selection of funds. This freedom of choice is advantageous for several reasons.

Not only do you get complete control over the assets you invest your money in, but some 401(k) funds charge exorbitant fees (called expense ratios) that can seriously eat into returns. With an IRA, you can take steps to avoid high investment fees and build a portfolio that can generate higher returns than the stock market as a whole.

It may be disappointing to learn that IRA limits won’t increase in 2025. But you can still do a lot of good in your retirement by maxing out in the new year.

And remember: You don’t have to limit your retirement savings to $7,000 or $8,000 in 2025. Once you’ve maxed out your IRA, you can look at other accounts for purposes retirement savings accounts, such as health savings accounts (HSA) or even a taxable brokerage account.