Trad 401K vs. Roth 401K
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Me: Strategy is to take tax breaks now by contributing all retirement monies to a traditional 401K with the goal in mind of retiring early.My Colleague: Take tax breaks in retirement by contributing all retirement monies to a Roth 401K with the goal for having more in retirement.
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YearAgeSalaryAmount in Traditional 401K (earns an annualized 10.95% return). Will be taxed upon distribution at retirement.Taxes saved + 5% of salary towards early retirement (earns an annualized 10.95% return)Amount in Roth 401K (earns an annualized 10.95% return). Will be tax free at retirement.Company match placed in traditional 401K (earns an annualized 10.95% return). Will be taxed upon distribution at retirement.5% of salary towards early retirement (earns an annualized 10.95% return)
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200823$40,000$23,250$5,268$15,500$7,750$2,000
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200924$42,000$50,208$11,376$33,472$16,736$4,319
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201025$44,100$81,339$18,430$54,226$27,113$6,997
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201126$46,305$117,161$26,546$78,107$39,054$10,078
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201227$48,620$158,250$35,856$105,500$52,750$13,613
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201328$51,051$205,252$46,506$136,835$68,417$17,656
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201429$53,604$258,885$58,658$172,590$86,295$22,270
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201530$56,284$319,948$72,494$213,298$106,649$27,522
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201631$59,098$389,333$88,215$259,555$129,778$33,491
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201732$62,053$468,033$106,047$312,022$156,011$40,261
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201833$65,156$557,154$126,240$371,436$185,718$47,927
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201934$68,414$657,928$149,074$438,619$219,309$56,596
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202035$71,834$771,725$174,858$514,483$257,242$66,385
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202136$75,426$900,070$203,939$600,047$300,023$77,425
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202237$79,197$1,044,661$236,700$696,441$348,220$89,863
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202338$83,157$1,207,387$273,571$804,925$402,462$103,861
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202439$87,315$1,390,348$315,026$926,898$463,449$119,600
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202540$91,681$1,595,880$361,596$1,063,920$531,960$137,280
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202641$96,265$1,826,583$413,868$1,217,722$608,861$157,125
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202742$101,078$2,085,345$472,499$1,390,230$695,115$179,385
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202843$106,132$2,375,380$538,215$1,583,587$791,793$204,334
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202944$111,439$2,700,258$611,826$1,800,172$900,086$232,280
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203045$117,010$3,063,948$694,231$2,042,632$1,021,316$263,565
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203146$122,861$3,470,863$786,430$2,313,909$1,156,954$298,569
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203247$129,004$3,925,907$889,534$2,617,271$1,308,636$337,712
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203348$135,454$4,434,526$1,004,778$2,956,351$1,478,175$381,465
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203449$142,227$4,920,107$1,004,778$3,335,184$1,667,592$430,346
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203550$149,338$5,458,858$1,004,778$3,758,255$1,879,128$484,936
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203651$156,805$6,056,603$1,004,778$4,230,546$2,115,273$545,877
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203752$164,645$6,719,801$1,004,778$4,757,591$2,378,796$613,883
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203853$172,878$7,455,620$1,004,778$5,345,537$2,672,769$689,747
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203954$181,522$8,272,010$1,004,778$6,001,213$3,000,607$774,350
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204055$190,598$9,177,795$1,004,778$6,732,203$3,366,101$868,671
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204156$200,128$10,182,764$1,004,778$7,546,928$3,773,464$973,797
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204257$210,134$11,297,776$1,004,778$8,454,744$4,227,372$1,090,935
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204358$220,641$12,534,883$1,004,778$9,380,538$4,690,269$1,090,935
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204459$231,673$13,907,452$1,004,778$10,407,707$5,203,854$1,090,935
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204560$243,256$15,430,318$1,004,778$11,547,351$5,773,676$1,090,935
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