Roth vs Traditional: $6,500/yr, 7%, 35 Years, 12% Now, 22% Retire
Compare Roth vs Traditional IRA for someone in the 12% bracket now contributing $6,500 per year at 7% for 35 years who expects a 22% bracket in retirement.
How to use this tool
- Enter the gross (pre-tax) amount you can contribute.
- Set your expected return and the number of years until withdrawal.
- Enter your marginal tax rate today and your expected rate in retirement.
- Compare the after-tax values and see which account wins.
Young earners in the 12% tax bracket often benefit most from the Roth IRA — see how $6,500 per year at 7% over 35 years compares between accounts.
Frequently asked questions
- Is Roth or Traditional better?
- Roth is better when your tax rate today is lower than it will be in retirement; Traditional is better when today's rate is higher. If the rates are equal, the after-tax result is identical.
- Why does the growth rate not change the winner?
- Growth (1 + r)^n multiplies both options equally, so it cancels out of the comparison. Only the two tax rates determine which account ends with more after tax.
- What about employer matching?
- Employer matches are always made pre-tax (Traditional-style), regardless of where you contribute. This calculator compares a single personal contribution and excludes matching.
- Should I just split between both?
- Many savers hold both for tax diversification, which hedges against uncertainty about future tax rates and gives flexibility to manage taxable income in retirement.