17
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
this post was submitted on 28 Oct 2023
17 points (100.0% liked)
Personal Finance
3809 readers
1 users here now
Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Join our community, read the PF Wiki, and get on top of your finances!
Note: This community is not region centric, so if you are posting anything specific to a certain region, kindly specify that in the title (something like [USA], [EU], [AUS] etc.)
founded 1 year ago
MODERATORS
A traditional IRA is tax free going in, but taxed coming out. A Roth is the opposite and taxed going in, but tax free coming out.
Mathematically, they're equivalent. The only reason to choose one over the other is your personal income tax rate. If you think you'll pay a lower tax rate in retirement (because you won't be making as much, and thus will be in a lower tax bracket), then you'd pick a standard IRA. If you have a shit job now and expect to make more later, a Roth would make more sense.
You're correct about the now vs. later part but I'll also note that tax laws can change and some people think that getting ahead of the curve and confirming their taxes now via Roth has value. I'm not one of them, but it's certainly a strategy.