No. of Recommendations: 0
If you are saving in your 20s, having 50-60-70 years of tax free gains for your ROTH sure can make a lot of difference. If you are in the 20-30% more tax bracket, all those gains are tax free. In a traditional account (non deferred) you are paying taxes annually on gains...interest and dividends and capital gains.

I have to admit that I'm looking at Roths & IRAs from the standpoint of somebody who retired before there was such a thing as 401k-Roth and when the maximum IRA+Roth contribution limit was only $2000-$3000.

My first IRA limit was $1500/yr, and at that time me & co-workers were like, "Yeah, right, like who in the world can afford to put $1500 into an IRA."

It's better now, but still only $6000. Better than a poke in the eye with a sharp stick, but....

Also, I suspect that MOST people have the same reaction that we had back then, except it's "...who can afford to put $6000..."

Times two, of course, for most people. But if you can't afford $6K you sure can't afford $12k.

I haven't run comparative lifetime cash-flow analyses recently---it doesn't apply to me so I don't much care---but the last time I did the difference in final outcome was small.

Like I said, I think that FOR MOST PEOPLE the primary advantage is the forced savings aspect, that the money you put into an IRA is in a dedicated "for retirement" account and can't easily be spent on current-day toys.
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