Roth vs Traditional: $7,000/yr, 6%, 20 Years, 32% to 24%
Compare Roth vs Traditional IRA for $7,000 per year at 6% return over 20 years in the 32% bracket now, expecting 24% 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.
Higher-income earners dropping from a 32% bracket to 24% in retirement should compare Roth and Traditional IRA outcomes — this tool does it for $7,000 per year at 6% over 20 years.
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.