ROTH IRA better than traditional for my situation? | TigerDroppings.com

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wegotdatwood
Arkansas Fan
Member since Aug 2009
17094 posts

ROTH IRA better than traditional for my situation?



Just curious, my wife and I won't ever make a whole lot of $. We gross 78k and will probably stay in that area for a long time.

I'm 24, with $6,100 in a roth and my wife is 28 and only has 1k in a 401k with a former employer. No IRA set up for her.








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Tmacelroy12
LSU Fan
Houston
Member since Aug 2012
5489 posts

re: ROTH IRA better than traditional for my situation?


I would say it is, for the obvious reasons.

Someone alluded earlier on the board that, being so young, the benefit of not paying taxes up front from the traditional IRA offset the money you put into a Roth. The whole principle behind that is the time-value of money, being able to compound more of your actual earnings and so on.

I'm not exactly sure which one is the best vehicle, but both are great tools. Need to do more research on the subject, but those are my thoughts






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wegotdatwood
Arkansas Fan
Member since Aug 2009
17094 posts

re: ROTH IRA better than traditional for my situation?


Thanks, tmac





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TheIndulger
Longwood Fan
Member since Sep 2011
10736 posts

re: ROTH IRA better than traditional for my situation?


A Roth would be good because you can withdraw the original money you put in without penalty. As far as how much you would earn, they would likely be around the same.





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acgeaux129
USA Fan
We are BR
Member since Sep 2007
15011 posts

re: ROTH IRA better than traditional for my situation?


Roth IRA since you are only 24. Go with Traditional as you get older for tax diversification IMO.

If you need some motivation to save, do a TVM problem with PV= $1.4 mil (around 40k/yr in today's dollars for 35 yrs would be reasonable given your income IMO) and assume 2-3% inflation.

That said, you get to give at least half of it away once Texas goes blue in a couple decades.






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TheDiesel
LSU Fan
Houston via Baton Rouge
Member since Feb 2010
2458 posts
 Online 

re: ROTH IRA better than traditional for my situation?


I'm also looking into a Roth. I'm 1 yr out of college and put 5% into my 401k to get my employee match and usually save 1.5k a month in cash after all expenses.

Who is the best company to go with to open a Roth?






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tigeraddict
LSU Fan
Baton Rouge
Member since Mar 2007
4797 posts

re: ROTH IRA better than traditional for my situation?


1) if you company has a 401k and matches, then contribute up to what they match. Will not get a better ROI than with the match
2) if young, contribute the rest of your available funds for retirement into a ROTH up to the contribution limit
3) once ROTH maxed out, and you still have monies available for retirement then traditional IRA or 401k






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yellowfin
Illinois Fan
Coastal Bar
Member since May 2006
71405 posts
 Online 

re: ROTH IRA better than traditional for my situation?


quote:

I'm 24

yes






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tokenBoiler
Purdue Fan
Lafayette, Indiana
Member since Aug 2012
466 posts

re: ROTH IRA better than traditional for my situation?


quote:

A Roth would be good because you can withdraw the original money you put in without penalty. As far as how much you would earn, they would likely be around the same.


Think about tax brackets, too. Unless the rules change (they always could, but how do you predict?) money you take out of the Roth after retirement will be tax free. If your own tax rate goes up significantly by the time you retire, (and that does seem fairly likely) that can make the Roth even more attractive compared to the traditional IRA.






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acgeaux129
USA Fan
We are BR
Member since Sep 2007
15011 posts

re: ROTH IRA better than traditional for my situation?


Vanguard





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