Retirement Savings Gap Widens as 2026 IRA Limits Hit $7,500

The 2026 IRA contribution limit rises to $7,500, yet most households still skip employer 401(k) matches and annual IRA contributions, said Michelle Mieras, senior wealth strategist at BMO Private Bank.

"If you were walking down the street and saw 3% of your salary on the ground, would you not pick it up? Don't leave free money on the table," Mieras said.

The 2026 cap allows an extra $1,100 catch-up for savers 50 and older. Average traditional IRA balances climb from $9,315 for savers in their late 20s to $357,902 for those in their late 60s, per IRS data on 2023 year-end values released in June 2026, while median Roth IRA balances run from $19,311 in the 20s to $68,661 in the 70s, according to Empower.

The stakes are rising because IRAs hold 39 percent of all U.S. retirement-market assets and 44 percent of households own one, per the Investment Company Institute. Mieras urged savers to stress-test plans without relying on Social Security and Medicare, which face projected depletion within the next decade.

The Two Moves Most Savers Skip

Mieras pointed to two underused savings moves. Beyond capturing the full employer match, she recommended making annual contributions to an IRA or, for those who qualify by income, a Roth IRA outside the workplace plan. Eligibility requires earned income for the account holder or spouse, and the government caps contributions at a "fairly modest" $7,500 for 2026, she said. A traditional IRA contribution may also be tax-deductible depending on income.

The deduction phases out between $81,000 and $91,000 for single taxpayers covered by a workplace plan in 2026, and between $129,000 and $149,000 for married couples filing jointly when the contributing spouse is covered, per IRS rules. Roth IRA contributions phase out between $153,000 and $168,000 for single filers and $242,000 to $252,000 for married couples filing jointly. Traditional IRAs also carry required minimum distributions starting at age 73 or 75, while Roth IRAs have no lifetime RMDs.

Where Balances Stand by Age

Average balances rise sharply with age, but medians tell a more conservative story. In their 40s, average traditional IRA balances reach $106,831 for the 45-to-50 bracket, while the median sits at $42,427, per Empower. By the 50s, averages climb to $214,117 for the 55-to-60 bracket, with a median of $140,597.

Fidelity's benchmarks suggest having one times annual salary saved by 30, three times by 40, six times by 50, eight times by 60 and 10 times by 67. A 40-year-old earning $90,000 would target $270,000 across all retirement accounts, not just an IRA. Mieras cautioned against chasing a single watermark such as $1 million, since lifestyle, medical needs, taxes, part-time income and caregiving all shape the number.

The takeaway is that small, consistent contributions compound over decades, and catch-up provisions give older savers a final push. Mieras said the only time it is truly too late to save is at retirement, and those behind should cut discretionary spending, trim projected retirement expenses and consider shifting to a less demanding job that still offers health insurance and 401(k) matching.

This article is for informational purposes only and does not constitute investment advice.