You see, while the Roth is a great opportunity for some, for the average person, you should have a certain amount of pre-tax money saved before thinking about Roth.
Make sense?
Joe

TIA

Of course – if one has a huge taxable pension (they still exist) they may retire in the same bracket as when they worked, and any IRA withdrawals would, in fact, be at the marginal rate. But that doesn’t appear to be the case for most. Mark seemed to feel that lower income people should favor Roth, but again, those people are likely to retire with little savings at all, and be in the ‘zero’ bracket.
I appreciate your thoughts. Thanks for visiting.
JOE

The thing that bothers me about that article, like many others, is that he repeatedly hangs on the tax bracket at contribution vs retirement as being the key determining factor as to whether you should invest in traditional vs Roth, and he implies that the withdrawals are taxed at the marginal tax rate. There’s no mention in there that anyone making a withdrawal would get a tax deduction or have to pay into lower tax brackets of a progressive tax scale before paying anything at the marginal rate. Some of the responses indicate that was their take also, such as, “you retire and start taking it out, you have to pay tax on the 25,000. AT 25% that’s 6,250.” The author also stated that if you knew your tax bracket at retirement, it would simply be a matter of using the calculator he links to, but I found two problems with that calculator. When doing the direct comparison in the graph of Roth vs Traditional, that calculator assumes that if you have $5000 of gross income to invest, that you can put the same $ into both funds, but we know the Roth investment would be less due to the initial tax that comes out of the $5000. And the bigger problem with the calculator, is just as I was saying about that article, is if you enter 15% as the marginal tax rate in the calculator, it applies that tax rate to the entire final total of the traditional investment, as if deductions and the progressive tax structure didn’t exist, when we know it would likely be a much lower percentage, especially for most people. We don’t know what the future holds, but we can at least apply current facts and trends in our calculations rather than applying the “marginal tax to all” philosophy. Of course, there are other things to consider, primarily if someone is able to invest more heavily, will hit the yearly contribution caps, and will have higher forced distributions during retirement, and whether someone has other sources of income. I dont think that applies to most people, so I agree with you, when it comes down to the pure numbers, and the people most needing advice, the traditional IRA is the better choice.

And neither does this guy:
http://asktheexpert.blogs.money.cnn.com/2008/03/03/timing-uncle-sams-take-from-your-nest-egg/