A Five-Year Retrospective
By Barbara O'Neill, CFP®, AFC®
Sometimes the best way to make plans for the future is to study the past. This is my 60th blog post for 403bwise, marking five years of collaboration between Dan Otter, Scott Dauenhauer, and my company Money Talk (i.e., me). All of my previous 59 posts are archived in the “Dan’s Blog” section of the 403bwise website.
With this five-year milestone in mind, I thought it would be useful to review significant personal finance events affecting 403(b) plan participants from October 2021 through September 2026. For example, the Dow Jones Industrial Average index closed at 34,326.46 on October 1, 2021, and briefly crossed the 54,000 threshold for the first time ever in August 2026.
This post provides a overview of key personal finance events during the past 60 months. The content is organized into five sections: 403(b) Contributions and Saving; Federal Legislation; Inflation, Markets, and Interest Rates; Social Security and Retirement Income; and Current Events and Seasonal Topics. It concludes with a research summary about 403(b) plan trends, three “need to know” facts, and six take-away action steps.
403(b) Plan Contributions and Retirement Saving
Elective deferral limits for 403(b) plan contributions grew significantly during the past five years:
- 2021: $19,500
- 2022: $20,500
- 2023: $22,500
- 2024: $23,000
- 2025: $23,500
- 2026: $24,500
Since 2021,the contribution limit increased by $5,000 or 25.6%. In addition, catch-up contributions for workers age 50+ increased from $6,500 (2021-2022) to $7,500 (2023-2025) to $8,000 (2026), a 23% increase.
A higher catch-up contribution limit for workers age 60 to 63 took effect January 1, 2025, as part of the SECURE 2.0 Act of 2022. The provision applies to savings in 403(b)s and other qualified employer retirement plans and is formula-based. The enhanced catch-up in both 2025 and 2026 is $11,250.
Example: Suppose a teacher turns 60 in 2026 and has a salary of $80,000. Turning 60 creates an additional $3,250 tax-advantaged contribution limit in 2026 ($11,250 - $8,000 allowed between ages 50 and 59).
If the teacher's 403(b) permits enhanced catch-ups, the maximum contribution could be: $24,500 + $11,250 = $35,750, or 44.7% of an $80,000 salary. Not everyone can afford to “max out” their 403(b) contributions, but the limit is very generous for those who can. A plan participant age 64+ returns to the regular age 50+ catch-up limit.
Federal Legislation
Three major federal laws were passed since 2021 that affected the financial security of 403(b) plan participants, including retirees: the SECURE 2.0 Act (2022), the Social Security Fairness Act (2025), and the federal tax and spending bill known as OBBBA (2025).
SECURE Act 2.0
SECURE 2.0 made many changes affecting employer retirement plans, including 403(b)s, and created a multi-year implementation schedule. Key changes include:
- An increase in required minimum distribution (RMD) start age from 72 to 73 or 75 (depending on birth year)
- Roth 403(b) participants no longer had to take lifetime RMDs (2024)
- An exception for penalty-free withdrawals up to $1,000 annually for emergency personal expenses (2024)
- The higher employer plan catch-up contribution limit for participants ages 60–63 (2025)
- Higher-paid, older employees must make age-based catch-up contributions as Roth contributions (2026)Social Security Fairness Act (SSFA)
The SSFA repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) Social Security benefit reductions that affected non-covered public sector retirees with pensions who still managed to accumulate 40 credits (10 years of work) to qualify for Social Security benefits. Many school employees were affected. The law was effective on January 2024, resulting in retroactive payments to retirees in early 2025.
OBBBA
OBBBA eliminated uncertainty about the sunset of the 2017 Tax Cuts and Jobs Act (TCJA), particularly fears that many Americans would be pushed into a higher marginal tax bracket. The individual income-tax rates established by the TCJA were made permanent. Other OBBBA features include:
- A larger standard deduction for all tax filing categories
- A larger child tax credit ($2,200 in 2025 and 2026)
- A larger estate tax exemption ($15 million in 2026)
- Limited time offers: no tax on qualified tips, no tax on qualified overtime, car loan interest deduction, an enhanced, income-based, senior deduction, and $1,000 in government seed money for 530a child savings accounts through 2028 and a higher ($40,000) state and local tax (SALT) deduction cap through 2029.
Inflation, Markets, and Interest Rates
Inflation
Inflation was already elevated in October 2021 with a 12-month year-to-year increase of 6.2%. It then reached a four-decade high of 9.1% in June 2022, substantially reducing people’s purchasing power. Monthly reports of the consumer price index during the past three years have ranged from 2.3% (April 2025 ) to 6.4% (January 2023).
Stock Market Indices
The percentage change in the Dow Jones Industrial Average index close at 34,326.46 on October 1, 2021, and 54,349.12 on August 5, 2026, was an impressive 58.33%. Within this time frame, there were bouts of extreme market volatility caused by COVID-19 reopening, inflation, interest rate uncertainty, elections, tariffs and trade-policy uncertainty, higher oil prices, geopolitics, and AI (ChatGPT launched in November 2022).
Interest Rates
From October 2021 through August 2026, the Federal Reserve moved from an exceptionally low interest-rate environment into one the most aggressive interest rate increase cycles in decades.
As shown below, the federal funds rate moved from essentially zero at the start of 2022 to above 5% in 2023. Rate reductions later took place in 2024 and 2025. This changing interest rate environment affected credit card APRs and yields on savings accounts, CDs, money market funds, and more.
Social Security and Retirement Income
As noted above, the SSFA repealed the WEP and GPO that reduced the Social Security benefits of public sector workers who had pensions from employment not covered by Social Security (myself included; receiving an unreduced Social Security check has increased my income by about $17,600 since January 2024).
Another key metric is the change in Social Security cost of living adjustments (COLAs) with large increases in 2022 and 2023, as shown below. The 2027 COLA will be announced in October 2026. It will be based on an average of changes in the CPI-W index in July, August, and September 2026.
In September 2023, federal student loan payments resumed following a pandemic-era pause. This changed cash-flow planning and retirement savings for millions of households.
Current Events and Seasonal Topics
During the past five years, my guest posts reflected both seasonal topics (e.g., income tax season) as well as current events (e.g., legislation and year-end personal finance summaries). Below are ten examples:
- Post- “250-Related” Financial Calculations and Information, a nod to America’s 250th anniversary.
- Post- 2025 Personal Finance Recap for 403(b) Plan Participants
- Post- Fall Financial Action Steps for 403(b) Plan Participants
- Post- An OBBBA Summary for 403(b) Participants
- Post- Spring Cleaning Your 403(b) Plan and Personal Finances
- Post- The Social Security Fairness Act: A Holiday Season Miracle
- Post- 2024 Personal Finance Recap for 403(b) Plan Participants
- Post- Year End Tax Planning Tips
- Post- 2024 Changes Affecting 403(b) Participants
- Post- Twelve 403(b) Plan New Year’s Resolutions
Research Results
According to the 2026 Plan Sponsor 403(b) Market Survey, 41.9% of 403(b) participants work in K-12 public schools and public colleges/universities, followed by 37.7% working for not-for-profit health care organizations.
School district vendor lists continue to be dominated by life insurance companies selling expensive annuities. The 403bwise vendor rating system, launched in October 2021 (just like my first blog post!) and continuously updated, helps 403(b) plan participants makes good vendor choices.
Most 403(b) research investigates plans covered by ERISA, where data from government-mandated reports are readily available. Recent trends include: increased plan participation and auto enrollment, increased Roth account availability, expanded investment menus, decreased loan and hardship withdrawal use, and growing popularity of target date funds.
Three (More) Things
- Higher RMD start ages provide more time to consider Roth conversions before mandatory withdrawals begin.
- Over 3.1 million SSFA payments were made to public sector workers with pensions, including teachers.
- Roth 403(b)s were aligned more closely with Roth IRAs by eliminating lifetime RMDs for participants.
Six Smart Strategies
No. 1: Do Your Own Retrospective — Compare your net worth (assets minus debts) in Fall 2021 to what it is today and identify changes and trends in your personal finances during the past five years.
No. 2: Maximize 403(b) Savings — Take advantage of higher annual 403(b) plan contribution limits that are indexed for inflation.
No. 3: Leverage “Gap Years” — Consider Roth conversions in the gap years between age 59.5 (no more early withdrawal penalty) and RMD age.
No. 4: Consider a Side Hustle — Work outside a 9-5 job for an extra income stream and/or quarters of coverage to earn full unreduced Social Security benefits.
No. 5: Project Future 403(b) Savings — Use several online 403(b) savings calculators like this to estimate future growth of your account.
No. 6: Do a Pro Forma Tax Projection — Create a 2026 tax return in October based on “best estimates” of income; then make tax adjustments as needed. For example, more or less tax withholding through December and increased charitable gifting.
In Summary
403(b) participants in September 2026 face a different planning environment than those in October 2021. There are higher 403(b) contribution limits, a later RMD starting age, new Roth account rules, major Social Security changes for workers affected by the SSFA, a new limited-time tax deduction for qualified older adults, dramatically different Federal Reserve interest rates, and substantially higher stock market index numbers.
Thank you for reading my blog posts during the past five years. I am now searching for new topics to cover in future posts. Please DM me @moneytalk1 on X or send an email to moneytalkbmo@gmail.com if you have ideas for content that can help the 403(b)wise community.
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This post provides general personal finance information and does not address all the variables that apply to an individual’s unique situation. It should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.