Originally Posted by
tennisguru
You're looking at someone investing 65k per year vs someone investing 100k per year. The reality is people put the exact same amount in (the max) regardless of whether it's traditional or Roth.
If you invest $18,500 in a traditional 401k, you don't pay taxes on the $18,500, so it only costs you $18,500.
Let's assume you are in the 35% tax bracket.
If you invest $18,500 in a roth 401k, you first have to pay taxes on the $18,500, so you only get to invest $18,500 * 0.65 = $12,025. Investing $18,500 in a roth 401k costs you $18,500 / 0.65 = $28,461.54.
If you want to compare apples to apples, you would have to look at investing $18,500 in a roth 401k vs. investing $18,500 in a traditonal 401k and an additional ($24,461.54 - $18,500) * 0.65 = $3,875 in a non tax advantaged account.
Once again, it is critically important that people understand this, and it is apparent that many in this thread do not understand this simple math.