THE NEW RULES OF RETIREMENT SAVING • 53
How much more spendable income can a Roth IRA offer over a traditional IRA?
This study shows even if your tax rate did drop in retirement, most savers are still better off paying their taxes upfront and sav- ing tax-free. Why? To answer that, we’ll look at the next reason I am so committed to tax-free saving. No. 2: Taxing the Seed vs. Taxing the Harvest How your savings should be taxed isn’t just a question of your tax rate now versus in the future. Let’s say you think you’ll be in a lower tax bracket when you retire. There is still an important rea- son you should save tax-free. Under tax-deferred plans, all the earnings in your account will be taxed at a future rate. It’s important to remember: you’re not trying to live off your contributions alone in retirement. You probably can’t save enough money to live off it comfortably. To
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