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Just a followup to my previous post, I wanted to factor in Social Security. Let's assume you take $40k in SS benefits in a year and $50k in Roth distributions. In this scenario, you would owe $0 in taxes. Great deal, eh?

The alternate scenario would be to take $40k in SS benefits and $60k out of a traditional IRA. In that case, you would owe a total tax bill of $8,500. The effective tax rate on the $60k of IRA withdrawals is 8500/60,000 = 14.2%, still a heck of a lot less than 25% deferred when taken out of your paycheck.

Tax estimates taken from:

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