igmetricYour situation
How the comparison works
- Traditional: you contribute pre-tax dollars, they grow for N years, and the whole balance is taxed once at your retirement rate: C × annuity × (1 − tret).
- Roth: you pay tax up front, so only C × (1 − tnow) goes in each year, then it grows tax-free: C × (1 − tnow) × annuity.
- The breakeven is simple under flat rates: Roth comes out ahead exactly when your retirement rate exceeds today's rate; Traditional wins when it's lower; equal rates produce identical results. The "breakeven retirement rate" shown is just your current rate.
- Simplified on purpose: one flat rate now, one flat rate later, end-of-year contributions, no contribution limits, no employer match, no RMDs, no early-withdrawal penalties, no state-tax nuance. Real tax planning has all of those.
Frequently asked questions
Is Roth or Traditional better?
Under simplified flat-rate math, it comes down to one comparison: if your tax rate in retirement will be lower than your rate today, Traditional usually leaves you with more after-tax dollars; if it will be higher, Roth usually wins; if the rates are equal, the two are identical. Real life adds contribution limits, RMDs, and progressive brackets on top of that.
What tax rate should I enter for retirement?
Your best guess at the effective marginal rate on withdrawals — often lower than today's rate if you'll live on less income, but not always. If you expect a pension plus large pre-tax balances, it could be similar or higher.
Does this account for IRS contribution limits?
No. The calculator accepts any annual contribution you enter. For reference, 2026 IRA limits are $7,500 under 50 ($8,600 at 50+), and 401(k) limits are much higher — check current IRS figures for your situation.
What about employer 401(k) matches?
Not modeled here. An employer match is effectively free money that usually outweighs the Roth-vs-Traditional question — contribute enough to capture the full match first, then decide where the rest goes.
Are the tax assumptions realistic?
They are deliberately simplified: one flat rate now, one flat rate later. Real tax systems are progressive, brackets change, and state taxes matter. Treat this as a directional comparison, not a tax plan.