Good video. In your example, when you contributed $20k per year to traditional and switched to Roth, what was the annual contribution? For an apples to apples comparison it would need to be less but I didn’t notice it on the video.
I am confused on how you can end up with $800k more ending value with Roth when you only paid $400k less tax. If doing an apples to apples comparison, the tax deferred balance before RMDs will grow to more than the Roth so your starting point when you begin to pay tax will be higher. In that case, paying $400k more in tax would have to result in over $1m decrease to end up $800k behind. Perhaps I am missing something?
The numbers don’t make sense to me. In your example when switching to the Roth instead of the traditional your total after 10 years stayed the same at $1.7m combined for retirement accounts and $136k for brokerage. That would not be the case since you would pay more tax up front to contribute to the Roth which means either you contributed less than you would have with traditional or if you contribute the same you had to pay the tax from other assets and you would have less in your brokerage account.
This is a great analysis of the Roth vs. Traditional 401k decision. The tax implications can be significant, especially over the long term. What advice would you give to people who are just starting their careers? How can they maximize their retirement savings potential and make the most of their early years?
I’d be retiring or working less in 5 years, and I’m curious to know how best people split their pay: how much goes into savings, spending, or investments. I earn around $200k per year but have nothing to show for it yet.
Excellent video Troy...Explained very good!!
Good video. In your example, when you contributed $20k per year to traditional and switched to Roth, what was the annual contribution? For an apples to apples comparison it would need to be less but I didn’t notice it on the video.
I am confused on how you can end up with $800k more ending value with Roth when you only paid $400k less tax. If doing an apples to apples comparison, the tax deferred balance before RMDs will grow to more than the Roth so your starting point when you begin to pay tax will be higher. In that case, paying $400k more in tax would have to result in over $1m decrease to end up $800k behind. Perhaps I am missing something?
The numbers don’t make sense to me. In your example when switching to the Roth instead of the traditional your total after 10 years stayed the same at $1.7m combined for retirement accounts and $136k for brokerage. That would not be the case since you would pay more tax up front to contribute to the Roth which means either you contributed less than you would have with traditional or if you contribute the same you had to pay the tax from other assets and you would have less in your brokerage account.
This is a great analysis of the Roth vs. Traditional 401k decision. The tax implications can be significant, especially over the long term. What advice would you give to people who are just starting their careers? How can they maximize their retirement savings potential and make the most of their early years?
I’d be retiring or working less in 5 years, and I’m curious to know how best people split their pay: how much goes into savings, spending, or investments. I earn around $200k per year but have nothing to show for it yet.
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