For many pre-retirees, 2026 is a useful year to revisit the amount they are setting aside for the next chapter. The IRS has increased several retirement plan contribution limits, creating additional room for eligible workers to save while they are still earning an income.
That extra room may be particularly relevant if you are considering a future move to Dripping Springs, the Austin Hill Country, or another lifestyle-focused retirement destination. A relocation can involve a new home, acreage, renovations, insurance, transportation, healthcare, and a different pattern of spending. Building flexibility before the move may help you approach those decisions with greater confidence.
The important point is that higher contribution limits are not a reason to save blindly or chase complicated investments. They are an opportunity to coordinate savings, liquidity, portfolio construction, and the lifestyle you want to support.
What are the 2026 retirement contribution limits?
According to the IRS announcement for 2026, the key limits include:
| Account or provision | 2026 limit |
|---|---|
| 401(k), 403(b), governmental 457, or Thrift Savings Plan employee deferral | $24,500 |
| General catch-up contribution for eligible participants age 50 and older | $8,000 |
| Total employee contribution for many participants age 50 and older | $32,500 |
| Higher catch-up for participants ages 60 through 63 | $11,250 |
| Total employee contribution for many participants ages 60 through 63 | $35,750 |
| Combined traditional and Roth IRA contributions | $7,500 |
| IRA catch-up contribution for individuals age 50 and older | $1,100 |
| Total IRA contribution for individuals age 50 and older | $8,600 |
The IRA limit applies to your combined contributions across traditional and Roth IRAs, not $7,500 to each account. The IRS also notes that rollover contributions do not count toward the annual IRA contribution limit. Eligibility, income, compensation, employer plan rules, and tax treatment can all affect what is appropriate for your circumstances.
“The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $24,500.” , Internal Revenue Service
Here are five ways Hill Country pre-retirees may want to think about the changes.
1. Increase your savings rate gradually, but intentionally
The first move is simple: review your current payroll contribution and determine whether you can increase it.
You do not necessarily need to move immediately to the maximum. A one- or two-percentage-point increase may be more realistic, especially if you are also saving for a home purchase, helping family members, or managing higher current expenses.
If your employer offers a matching contribution, understand how the match works before making changes. Some plans match every dollar up to a certain percentage, while others use different formulas or contribution schedules. Your plan documents or human resources department can provide the specific details.
For a pre-retiree considering a move to Dripping Springs, the goal is not simply “save more.” It is to create a savings rhythm that can continue while you evaluate neighborhoods, housing styles, and the cost of Hill Country living.
A useful review might include:
- Your current contribution percentage
- Employer matching contributions
- Expected income through your planned retirement date
- Other savings earmarked for relocation
- How much monthly cash flow you may need after leaving work
Small, consistent increases can be easier to maintain than a last-minute attempt to catch up.
2. Use catch-up provisions as part of a broader timeline
The catch-up provisions can be especially meaningful for people within a decade of retirement.
For 2026, eligible workers age 50 and older may generally contribute an additional $8,000 to many workplace retirement plans, bringing the employee contribution total to $32,500. A special SECURE 2.0 provision raises the catch-up amount to $11,250 for participants ages 60 through 63, for a potential total of $35,750.
These provisions are not automatic. Your employer plan must allow the relevant contributions, and payroll systems may need to be updated. It is worth checking your plan’s rules and reviewing how contributions will be distributed throughout the year.
The larger opportunity is strategic coordination. If you expect to work until age 65, 67, or beyond, catch-up contributions may help you:
- Strengthen retirement income reserves
- Build greater flexibility around your retirement date
- Reduce dependence on selling investments during an unfavorable market period
- Create more room for future lifestyle decisions
- Continue building assets while your earning power remains strong
Catch-up contributions should still fit within your household cash-flow needs. Saving aggressively while carrying expensive debt or lacking an accessible emergency reserve may not be the right first step.
3. Coordinate retirement accounts with your relocation plans
A Hill Country move may happen several years before retirement, at retirement, or after you have already stopped working. Each timeline creates different planning questions.
For example, someone who is still earning a high income may prioritize workplace contributions and taxable savings for near-term flexibility. Someone who has already retired may be more focused on the order and timing of withdrawals. A business owner may have additional workplace plan considerations that differ from those of an executive.
Your retirement accounts should be viewed alongside, not separately from, your relocation plan.
Consider creating a written timeline that includes:
- When you hope to move
- Whether you plan to rent before buying
- The likely timing of a home purchase
- Major renovations or furnishings
- Vehicle and transportation needs
- Healthcare and insurance expenses
- When employment income may end
- Which accounts may provide future income
This can help distinguish money intended for long-term growth from money you may need within the next few years.
A home in the Hill Country can be a meaningful part of your lifestyle, but it should not consume every liquid resource. Our previous discussion of the long-term value of Dripping Springs real estate explores why it is important to consider a home within the context of your broader financial picture.
4. Keep a relocation reserve outside retirement accounts
Maximizing tax-advantaged contributions does not mean every available dollar belongs in a retirement account.
Retirement accounts are designed for long-term savings and may involve taxes, penalties, or restrictions when money is withdrawn before certain conditions are met. If you expect to purchase a Hill Country property, make a large down payment, or cover several years of transition expenses, you may want a separate pool of accessible savings.
That reserve might include cash or other appropriate liquid holdings, depending on your circumstances and time horizon. The purpose is not to predict the market. It is to avoid forcing a long-term investment portfolio to fund a short-term expense at an inconvenient time.
A relocation reserve can support:
- A rental period while you explore the area
- Earnest money and closing costs
- Moving expenses
- Home improvements
- Property maintenance
- Higher-than-expected insurance or utility costs
- Travel between your current home and the Hill Country
- A temporary income gap
This separation can make your overall plan easier to understand. Long-term retirement assets can be invested for a long-term objective, while near-term spending needs remain more accessible.
5. Review the investments inside your accounts
A higher contribution limit only tells you how much you may be able to save. It does not determine how the money should be invested.
For pre-retirees, this is a good time to review whether the portfolio reflects your time horizon, income needs, risk tolerance, and planned move. A portfolio intended to support a future Hill Country lifestyle may need both long-term growth and an appropriate level of stability.
A disciplined review generally focuses on:
- Proper asset allocation
- Diversification across publicly traded markets
- Long-term equity ownership for growth potential
- Traditional fixed income for stability and income needs
- Liquidity and transparency
- Reasonable costs
- Risk management through portfolio construction
- The role each account serves in the overall plan
The focus should not be on finding a complicated investment that promises to solve every retirement challenge. Transparent, liquid, publicly traded investments can make it easier to understand what you own, what it costs, and how it fits into your plan.
You may also discover that your workplace plan includes expensive or duplicative investment options. That does not automatically mean a change is necessary, but it can make a review worthwhile. A fiduciary advisor can help evaluate account structure and portfolio design based on your specific circumstances.
Make the contribution increase part of a lifestyle plan
The 2026 retirement contribution increases are useful because they provide more flexibility, but only when connected to a larger plan.
For someone considering retirement in Dripping Springs, the real question is not simply whether to contribute an additional dollar to a 401(k) or IRA. It is how today’s savings decisions support tomorrow’s home, community, travel, outdoor activities, healthcare, and pace of life.
Start by reviewing your current contributions, catch-up eligibility, account investments, and relocation timeline. Then consider how much liquidity you may need outside retirement accounts. The best strategy will depend on your income, age, existing assets, expected retirement date, and personal goals.
You may also enjoy our guide to custom homes in Dripping Springs as you think about how your future home fits into your overall lifestyle and financial plan.
Schedule a private meeting with a fiduciary financial advisor today by calling (512) 593-8380 or by visiting: https://calendly.com/portafoliocapital/15min
Portafolio Capital Management dba Mau Sanchez Capital is a Registered Investment Adviser. This content is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Advisory services are provided only pursuant to a written advisory agreement.
To learn more about Portafolio Capital Management dba Mau Sanchez Capital, visit https://portafoliocapital.com/ or call (512) 593-8380.
This article may include stories, scenarios, and perspectives created or assisted by artificial intelligence. Although the individuals and circumstances described may be fictional, the topics are intended to reflect real financial, personal, and lifestyle issues that retirees and individuals commonly face.
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