So people keep telling me to invest in a Roth IRA, which is after-tax, but this just sounds retarded
1. The only reason is: they say that later I'll be in a higher tax bracket, so it's better to pay the taxes now. This makes no sense though, when I'm retired I'll be making like $0/year, won't my gains tax be minimal?
2. Tax-deferred is significantly better than taxes now; $1 of tax now equal $7.04 of tax 40 years away when assuming a 5% interest rate--which means paying $1 of tax now and $7.04 of tax later is equivalent, but I highly doubt my tax charge in 40 years will be 7x what it is now
Am I missing something? Is a Roth IRA only good if I plan to withdraw early/while I have an income?
Also how much are you guys putting in your 401(k)
you do realize that capital gains taxes are on total gains right?
>>1373830
Actually I just did more research and found that 401k withdrawals are taxed as income and not capital gains so as long as I withdraw less than 37k a year I can keep my taxes at 15% (assuming tax laws don't change significantly) which is already better than the 25% I pay now.
>>1373826
>5% interest rate
Rates will be no where near those levels