I am just learning about these things, so I was wondering if you all would help me with a strictly hypothetical "math problem"
Let's say I am an optimistic person and expect the market to double every 10 years, and I'm 30 years from retirement
If I have 100k in an IRA, since the market will be up 8x when I retire in 30 years, I'll end up with 800k. But, since I have to pay 30% income tax on this when I retire, I'll actually only have 800k - 30% = 560k. Basically 100k * 8 * 70%.
VERSUS
If I convert to a Roth IRA now, I pay taxes now. So, when I retire, I have 100k * 70% * 8 years of appreciation = 560k in my pocket
Is that all right? So the only real difference is whether I predict my income tax in retirement (that "30%" - based on a combination of legislation and how much I decide to take out per year) is greater than or less than it is today? That is a tough prediction to make!
Submitted February 01, 2018 at 06:00PM by me_pie_three http://ift.tt/2BOlyGJ
