Quote:
Originally Posted by no_worries
Roth vs. Regular IRA. It boils down to one question: In retirement, will your taxable income be higher or lower than it is now? If you're paying 20% in taxes now and you expect to only be paying 15% after retirement, it makes no sense to have money in a Roth.
That's not all there is to it. The benefit of the roth is that you won't pay taxes on the growth. Meaning that if you expect your money to double every 7 years and you invested 5000 to start with (I think that's the current annual max- I don't do a roth so I'm not on top of this), after 21 years that 5000 would become 40,000. You probably paid a higher tax rate on what you invested- 5000- but you're not paying it on the 40,000 that it grew into.
It's early and I haven't had any coffee, so if my math is off, I apologize. It's the concept I'm going for, not the application.
I have a roth but I haven't invested in it for a few years. I'm not sure I trust the government to leave the roths alone. I'm sure that someone down the road will punish the roth investors and tell them they'll have to pay taxes on their money when they take it out after all because Billbo over here didn't bother to invest and it's just not fair for me to have retirement money when he doesn't.