| In a traditional pretax retirement plan you subtract your
contribution from your income before paying taxes. This saves you
taxes now. In affect, it allows you to put more money into the
account and, of course, this extra money earns interest and grows. Then, when you withdraw
money at retirement, you pay income taxes on the amount you withdraw. You are gambling that you will be in a lower tax bracket
at retirement than you are now. In a Roth IRA, your contributions are included in your income and
you
pay taxes on those contributions now. However, at retirement you pay no taxes on the money you
withdraw. So the original contribution, plus interest earned, escape
taxes.
In the calculator below tell us how much you can save. We will
project results assuming the entire contribution amount will go into the pretax plan,
but that the Roth IRA contribution will be reduced by the income taxes you
pay. Then we will show what your income at retirement might be.
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