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Retirement Tool

Roth vs Traditional IRA Calculator

Compare pre-tax and post-tax retirement strategies side-by-side. See which account maximizes your real, post-tax net wealth.

Retirement Plan (2026 Caps)

30 yrs
65 yrs
$7,500.00
$

Standard IRS contribution limit capped at $7,500 for 2026.

8%

Tax Comparison

22%

The tax rate you would pay today on your highest dollar of income.

15%

The blended rate you expect to pay on your Traditional IRA withdrawals in retirement.

Reinvest Tax SavingsReinvest Traditional tax savings in a taxable account today.

Optimal Strategy Verdict

TRADITIONAL IS SUPERIOR

Saving taxes at 22% today beats paying 15% in retirement. The Traditional IRA's pre-tax tax savings (assuming reinvestment) provide a net wealth advantage of $60,306.00 over the Roth IRA.

Years Compounded
35 Years
Net Wealth Advantage
$60,306.00

Post-Tax Balance Comparison at Retirement

Roth IRA Balance (Net)$1,395,766.00100% Tax-free withdrawals
Traditional IRA (Net)$1,186,401.00After deducting 15% income tax
Traditional Strategy (Total)$1,456,072.00Includes $269,671.00 tax savings

Strategy Growth Curves Over Time

Visualizing how pre-tax and post-tax wealth accumulates and crosses over as you approach age 65.

Loading Interactive Visualizations...

Comparative Strategy Framework

Roth IRAThe Power of Tax-Free Compounding

By investing after-tax dollars, you assume a tax loss today. In return, you shield decades of compound stock market growth from taxes. In retirement, even if you withdraw millions of dollars of accumulated stock growth, you pay zero dollars in federal income tax.

TraditionalThe Pre-Tax Liquidity Boost

By investing pre-tax dollars, you lower your adjusted gross income, saving money on taxes today. If you reinvest those tax savings in a taxable brokerage account, you compound extra capital. In retirement, withdrawals are taxed as ordinary income, but the extra compounded savings help offset this tax bill.

GuidelinesRule of Thumb Checklist

  • Choose Roth IRA if: You are currently in a low tax bracket (e.g. 10% or 12%), are young with decades of growth ahead, or expect tax rates to increase in the future.
  • Choose Traditional IRA if: You are in your peak earning years with a high tax bracket (e.g. 24%+), want to lower your current adjusted gross income, or expect a lower standard of living in retirement.
  • FICA Limits: Neither IRA accounts shield you from standard 7.65% payroll taxes (FICA) on earnings, only income taxes.

Understanding the Math of Roth vs. Traditional Accounts

When planning for retirement, selecting between a Roth and a Traditional IRA is one of the most critical decisions you will face. While both accounts offer valuable tax-advantaged growth, they approach taxation from completely opposite directions.

The Progressive Bracket Advantage

The choice between Roth and Traditional hinges almost entirely on your current marginal tax bracket relative to your expected bracket in retirement. If you are currently in a high tax bracket (e.g. 24% or 32%), taking a tax deduction today via a Traditional IRA saves you a massive amount of money. If you expect to live on a modest income in retirement (putting you in the 12% or 15% bracket), paying tax then is highly advantageous.

Conversely, if you are currently in a low tax bracket (e.g. 10% or 12%), the Roth IRA is almost always the superior choice. You pay a tiny tax penalty today in exchange for completely avoiding taxes on decades of compound investment gains.

Reinvesting Your Tax Savings: The Traditional Account's Secret Weapon

When you contribute $7,500 to a Traditional IRA in a 24% tax bracket, you don't just save for the future—you immediately reduce your current IRS tax bill by $1,800. To make a mathematically fair comparison against a Roth IRA, you must assume this $1,800 in "found cash" is reinvested in a taxable brokerage account rather than spent. If you spend the tax savings, the Roth IRA's post-tax advantage will easily outperform the Traditional IRA in net wealth at retirement.

Frequently Asked Questions

Essential answers regarding IRA accounts, phase-outs, deductions, and Roth conversions.

What is the primary difference between a Roth IRA and a Traditional IRA?
The primary difference lies in the timing of tax benefits. A Traditional IRA offers pre-tax benefits: your contributions are tax-deductible today, lowering your current taxable income, but withdrawals in retirement are taxed as regular income. A Roth IRA offers post-tax benefits: you pay income taxes on contributions today, but your money grows completely tax-free and all withdrawals in retirement are 100% tax-free.
What are the IRS contribution limits for Roth and Traditional IRAs in 2026?
For the 2026 tax year, the baseline contribution limit is capped at $7,500 for individuals under age 50. If you are age 50 or older, you qualify for a catch-up contribution, raising your maximum annual limit to $8,600. These caps apply to your combined contributions across all Traditional and Roth IRA accounts.
Who is eligible to contribute to a Roth IRA?
Roth IRA eligibility is subject to income thresholds (Modified Adjusted Gross Income, or MAGI). In 2026, the phase-out range is roughly $153,000 to $168,000 for single filers, and $242,000 to $252,000 for married couples filing jointly. If your income exceeds these caps, you cannot contribute directly, but you may look into a 'Backdoor Roth IRA' strategy.
What does it mean to reinvest the Traditional IRA tax savings?
Because Traditional IRA contributions are tax-deductible, they reduce your current income tax bill. Reinvesting the tax savings means taking that 'extra' cash you didn't pay in taxes and investing it in a standard taxable brokerage account. Doing this allows the Traditional strategy to remain competitive with the Roth IRA's tax-free compounding potential.
How do retirement tax brackets impact the choice between Roth and Traditional?
This is the core mathematical rule of IRA planning. If your marginal tax rate is higher today than it will be in retirement, a Traditional IRA is mathematically superior because you avoid high taxes now and pay lower taxes later. Conversely, if your current tax rate is lower than your expected retirement tax rate, a Roth IRA is mathematically superior because you lock in the low rate today and avoid high taxes in the future.

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