[mike3fan]

Originally Posted by mdf1576

There is no tax on the distributions for a Roth IRA. So if the account is worth 1 mil you,ve invested 200k, you come out waay ahead. Its the only way to go. Why do you think the govt restricts how much you can put in each year.

You assume that they will not tax the Roth,at one time Social Security income wasn't taxed,so counting on that money to be tax free in the future may not be all that wise.

I am gonna diversify as much as I can and I think both could be good but for different reasons,and yes I am gonna do a target retirement fund from Vanguard.

[no_worries]

There is no tax on the distributions for a Roth IRA. So if the account is worth 1 mil you,ve invested 200k, you come out waay ahead. Its the only way to go.

That's not my quote, but I assume that you're responding to me.

You're missing a key component in your math. Namely, the additional principal that you sacrifice to taxes every time you make a Roth contribution. If you pay 25% in tax how much do you need to earn to make that $5000 Roth contribution? $6667. So you have two choices; invest your after tax income in a Roth ($5000) or your pretax income in a tax deferred vehicle ($6667). Assuming all variable are constant, including pre- and post-retirement tax rates, your return will be exactly the same.

As far as...

Why do you think the govt restricts how much you can put in each year.

...that same contribution limit applies to a standard IRA, so the rationale doesn't apply.