Quote:
Originally Posted by Jenson71
I think the financial industry starts with an assumption that tax rates across all income levels will be generally higher in the coming decades.
I've had a financial advisor explain his belief that half Roth and half Trad is the way to go in order to take advantage of both a current and future benefit, but it's grounded in concerns that Congress will take away the Roth benefit, which I've never heard anyone else share a concern of, and the thought that a buck today is better than X bucks tomorrow.
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That’s assenine for anyone under like 45 or 50.
Tax rates are almost exclusively higher when you’re earning income (while you’re working) than when you’re not (retired, drawing from your retirement instrument)
The difference is GAINS in the Roth are not taxed ever. The basis is taxed when it is put in (basically - there is no tax shelter, but there are ways you could contribute non-taxed earnings - like gains from the sale of a home or restitution or some shit but for all practical purposes, let’s say ROTH dollars are taxed when you put them in), but if it goes up 100% between when you’re 40 making the contribution and 70 when you’re pulling it out, that means half of it wasn’t taxed. Or put another way, your tax rate would have to be half of what you’re paying now, and let’s be real here, if your tax rate is half of what you’re paying now you’re going to have a miserable retirement.
And especially for young people, early basis can yield waaaay more than 100%
Gain.
Do the ROTH.