3 Money Moves to Kick-Off 2026

I am sending big, heartfelt wishes that the coming year brings you health and (more) happiness. And the time to spend with those you love. That is what matters most.

But you know me: I am always going to be looking out for your financial well-being.

I want you to know about some important changes to retirement savings rules for 2026, and I also want to make sure you are ready for whatever curveballs 2026 may throw at us. We can’t control what happens in the economy, but you do have plenty of control over your ability to weather bad news.

Here are some key financial moves to consider for 2026. I am not suggesting you do all of them. Be realistic. Making progress on one goal is fantastic. Think you can handle two, or maybe three? Go for it. 

1. Boost your emergency savings.

If you have not yet set aside at least eight months of living expenses in a savings account, please consider doing what you can to increase your balance. There are signs the economy may be losing steam. That’s not a prediction. It’s just a reminder that recessions or climbing unemployment don’t tell us six months in advance that they are on the way. We need to be prepared. 

And I want to be clear: I am not suggesting that if you have one or two months of savings right now that you come up with a way to get to eight months pronto. I know that may not be realistic. But I want you to push yourself hard to save more. I think you will be so glad you did. Financial security always feels good, and having more financial security right now seems especially smart.

2. Save more in a Roth IRA.

The maximum you can contribute to a Roth IRA (or Traditional IRA) in 2026 is $7,500 if you are not yet 50 years old. That’s up from the $7,000 limit in 2025.

If you are at least 50 years old, the limit is $8,600. That’s not a typo. I know you’re thinking that the over-50 catch-up contribution is $1,000, not $1,100. And you are right: in the past, the catch-up contribution was always a flat $1,000 more than the regular contribution limit. But a new federal law now mandates that the catch-up contribution will be adjusted to account for inflation. So for 2026, the catch-up amount rises to $1,100, for an overall contribution limit of $8,600 if you are at least 50 years old. 

You know I am a big believer that a Roth IRA is the way to go. You don’t get an upfront tax break on the money you contribute. But when you want to make withdrawals in retirement, all money you take out of a Roth IRA will be 100% tax-free. And there are no required minimum distributions for Roths. 

The only small hurdle is that you need to meet the income rules.

First: You must have earned income to contribute to a Roth IRA. If you are already retired, you can’t contribute money from pensions or investment accounts.

Second:  You can’t have too much earned income. In 2026, to be eligible to contribute the maximum $7,500/$8,600, an individual must have a modified adjusted gross income (MAGI) below $153,000, and if you are married, your joint income must be below $242,000. 

If you file as an individual and have MAGI between $153,000-$168,000, you will be able to make a reduced contribution. Above $168,000, you are not eligible to make a Roth contribution.

If you are married and have MAGI between $242,000-$252,000, you can make a reduced contribution. Above $252,000, you are ineligible for a Roth.

But keep reading…because you may be able to save even more in a Roth 401(k).

3. Choose the Roth 401(k) option at work. 

For those of you in your 50s and 60s, I know when you started to save for retirement, the only workplace option was what we now refer to as a Traditional 401(k). But most employers now offer the option of saving in a Roth 401(k). 

Please check if your plan offers a Roth 401(k) option. And if it does, I think you should do all your new savings (contributions for 2026 and beyond) in the Roth 401(k). I don’t want you to move any of your Traditional 401(k) money in your workplace plan into a Roth 401(k). That would trigger a tax bill. 

What I want you to do is to tell your plan that all your 2026 contributions should go into a new Roth 401(k) plan. 

I think you will be so glad you did this when you are retired. All the money in your Traditional 401(k) that you withdraw will be taxed as ordinary income. And with Traditional 401(k) at a certain age (73 right now for anyone born in 1959 or earlier; and 75 for anyone born in 1960 or later), you must take required minimum distributions, even if you don’t need the money, so the government can collect that tax.

Any money you have in a Roth 401(k) will be 100% tax-free when you make withdrawals in retirement. And there is no RMD. 

Now, of course, there is a trade-off. With a traditional 401(k), the amount of your contribution reduces your taxable income by your contribution amount for the year. That is, you get an “upfront” tax break. Roth 401(k) contributions don’t have this upfront tax break. Your contribution comes from your after-tax income. But to repeat this important feature:  the payoff is that in retirement, whatever your Roth account has grown to will be 100% tax-free if you make withdrawals, or if you leave the money to heirs.

In 2026, the contribution limit to a 401(k) is $24,500 if you are younger than 50. If you are between the ages of 50 and 60, you can save an additional $8,000 in your 401(k) in 2026. And if you are between the ages of 60 and 63, check if your plan offers “super” catch-up contributions. If so, instead of the $8,000 extra contribution (in addition to the base limit of $24,500), you may be able to contribute $11,250. 

I also want you to know that there’s a new rule starting in 2026. If you earned more than $150,000 last year, and you want to make catch-up contributions to your 401(k), you must do that saving in a Roth account. That’s good news as far as I am concerned, because as I have made clear, I think having some of your retirement money in Roths (Roth 401(k)s and/or Roth IRAs) will be a big help in managing your tax bills in retirement.