Originally Posted by
labbats
I believe you are mistaken. Many people think of Roth only on taxable income during retirement.
Keep in mind that the majority of your money you accrue in retirement is compound interest. I would rather be taxed only on the 20% or so that I put into my 401k at my current tax rate than be taxed on all of it at a lower rate.
Your not factoring in the power of compounding tax deferred on the extra 20% which for most legacy airline pilots is more likely 40% with state taxes and overall income. If tax rate is the same in retirement it’s a wash.
Simple example, you have 10,000 a year to contribute. With a conventional IRA and a 8% average return you will have over 1.2 million in 30 years. With a Roth if your current tax rate is 35% you will have just under 800,000. If your tax rate stays at 35% the 1.2 million is worth 780,000 post tax. Again it all comes down to if you think your taxes will be lower or higher in retirement and that taxes are enacted on Roth’s.