Roth vs. Traditional IRA Calculator
Definitions:
- Roth IRA: Contributions are made with after-tax dollars, and withdrawals in retirement are tax-free.
- Traditional IRA: Contributions are made with pre-tax dollars, and withdrawals in retirement are taxed.
- Rate of Return: The annual percentage increase in your investment.
- Tax Rate: The percentage of income paid in taxes.
Smart Tips:
- Consider your current and expected future tax rates when choosing between Roth and Traditional IRAs.
- A Roth IRA may be better if you expect to be in a higher tax bracket during retirement.
- Start contributing early to take advantage of compound interest.
- Maximize your contributions annually to grow your retirement savings faster.
- Consult a financial advisor to tailor your retirement strategy to your goals.