IRAs: Traditional vs Roth
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Roth IRA vs Traditional IRA
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Assumptions:
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Market Annual Rate of Return **10.12%
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Accumulation Period
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Annual Income$70,000.00
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Effective Tax Rate* while employed15.00%
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Percent of Income for Retirement
10.00%
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Amount investor can put into market
$7,000.00
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Traditional IRA: Amt actually invested$7,000.00
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Roth IRA: Amt paid to IRS-$1,050.00
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Roth IRA: Amt acctually invested$5,950.00
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Withdrawal Period
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Annual Withdrawal as Pct of Income90.00%
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Effective Tax Rate after retirement
15.00%
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Results
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Portfolio Value in 50th Year After ...
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30 Years Accumulation, 20 Years Withdrawal
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Traditional IRA...$3,360,397.38
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Roth IRA...$2,856,337.77
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Traditional Better by $504,059.61
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Detail for Results
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Working Years - Accumulation Phase
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YearAmt Invested Traditional IRAAmt Invested Roth IRAEOY Portfolio Value Traditional IRAEOY Portfolio Value Roth IRA
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1$7,000.00$5,950.00$7,000.00$5,950.00
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2$7,000.00$5,950.00$14,708.40$12,502.14
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3$7,000.00$5,950.00$23,196.89$19,717.36
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4$7,000.00$5,950.00$32,544.42$27,662.75
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5$7,000.00$5,950.00$42,837.91$36,412.22
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6$7,000.00$5,950.00$54,173.11$46,047.14
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7$7,000.00$5,950.00$66,655.43$56,657.11
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8$7,000.00$5,950.00$80,400.95$68,340.81
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9$7,000.00$5,950.00$95,537.53$81,206.90
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10$7,000.00$5,950.00$112,205.93$95,375.04
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11$7,000.00$5,950.00$130,561.17$110,976.99
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12$7,000.00$5,950.00$150,773.96$128,157.87
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13$7,000.00$5,950.00$173,032.28$147,077.44
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14$7,000.00$5,950.00$197,543.15$167,911.68
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15$7,000.00$5,950.00$224,534.52$190,854.34
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16$7,000.00$5,950.00$254,257.41$216,118.80
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17$7,000.00$5,950.00$286,988.26$243,940.02
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18$7,000.00$5,950.00$323,031.47$274,576.75
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19$7,000.00$5,950.00$362,722.26$308,313.92
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20$7,000.00$5,950.00$406,429.75$345,465.29
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21$7,000.00$5,950.00$454,560.44$386,376.37
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22$7,000.00$5,950.00$507,561.96$431,427.66
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23$7,000.00$5,950.00$565,927.23$481,038.14
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24$7,000.00$5,950.00$630,199.06$535,669.20
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25$7,000.00$5,950.00$700,975.21$595,828.93
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26$7,000.00$5,950.00$778,913.90$662,076.81
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27$7,000.00$5,950.00$864,739.99$735,028.99
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28$7,000.00$5,950.00$959,251.67$815,363.92
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29$7,000.00$5,950.00$1,063,327.94$903,828.75
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30$7,000.00$5,950.00$1,177,936.73$1,001,246.22
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Retirement Years - Withdrawal Phase
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At the end of the accumulation period, the Traditional IRA investor has
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$176,690.51
more dollars than does the Roth Investor.
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Traditional and Roth IRA withdrawals are taken at beginning of year (BOY)
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YearNeed In PocketBOY* Traditional Portfolio ValueBOY* Roth Portfolio ValueTraditional Withdrawal Roth Withdrawal EOY Traditional Portfolio ValueEOY Roth Portolio Value
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31$63,000.00$1,177,936.73$1,001,246.22$74,117.65$63,000.00$1,215,525.57$1,033,196.74
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32$63,000.00$1,215,525.57$1,033,196.74$74,117.65$63,000.00$1,256,918.41$1,068,380.65
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33$63,000.00$1,256,918.41$1,068,380.65$74,117.65$63,000.00$1,302,500.20$1,107,125.17
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34$63,000.00$1,302,500.20$1,107,125.17$74,117.65$63,000.00$1,352,694.87$1,149,790.64
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35$63,000.00$1,352,694.87$1,149,790.64$74,117.65$63,000.00$1,407,969.23$1,196,773.85
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36$63,000.00$1,407,969.23$1,196,773.85$74,117.65$63,000.00$1,468,837.37$1,248,511.76
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37$63,000.00$1,468,837.37$1,248,511.76$74,117.65$63,000.00$1,535,865.36$1,305,485.55
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38$63,000.00$1,535,865.36$1,305,485.55$74,117.65$63,000.00$1,609,676.58$1,368,225.09
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39$63,000.00$1,609,676.58$1,368,225.09$74,117.65$63,000.00$1,690,957.49$1,437,313.87
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40$63,000.00$1,690,957.49$1,437,313.87$74,117.65$63,000.00$1,780,464.04$1,513,394.43
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41$63,000.00$1,780,464.04$1,513,394.43$74,117.65$63,000.00$1,879,028.65$1,597,174.35
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42$63,000.00$1,879,028.65$1,597,174.35$74,117.65$63,000.00$1,987,567.99$1,689,432.79
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43$63,000.00$1,987,567.99$1,689,432.79$74,117.65$63,000.00$2,107,091.52$1,791,027.79
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44$63,000.00$2,107,091.52$1,791,027.79$74,117.65$63,000.00$2,238,710.83$1,902,904.21
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45$63,000.00$2,238,710.83$1,902,904.21$74,117.65$63,000.00$2,383,650.01$2,026,102.51
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46$63,000.00$2,383,650.01$2,026,102.51$74,117.65$63,000.00$2,543,257.04$2,161,768.49
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47$63,000.00$2,543,257.04$2,161,768.49$74,117.65$63,000.00$2,719,016.30$2,311,163.86
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48$63,000.00$2,719,016.30$2,311,163.86$74,117.65$63,000.00$2,912,562.40$2,475,678.04
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49$63,000.00$2,912,562.40$2,475,678.04$74,117.65$63,000.00$3,125,695.36$2,656,841.06
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50$63,000.00$3,125,695.36$2,656,841.06$74,117.65$63,000.00$3,360,397.38$2,856,337.77
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YearNeed In PocketBegin of Year Trad Portfolio ValueBegin of Year Roth Portfolio ValueTraditional WithdrawalRoth Withdrawal EOY Traditional Portfolio ValueEOY Roth Portolio Value
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* "Effective Tax Rate" The actual percent of income paid in taxes after allowing for dependents, deductions and credits.
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For incomes up to $150,000, the "effective tax rate" is usually under 15%
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** For the 50 year period, 1967 - 2017, the S&P 500 market has returned an average of 10.12% per year.
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The Roth IRA account results are always less than the traditional IRA results regardless of the Market Annual Rate of Return
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