Roth IRA vs Traditional IRA Calculator
Compare a Roth and a Traditional IRA on an equal after-tax basis and see which leaves you more spendable money in retirement.
How it works
Roth value = FV(after-tax contributions) · Traditional value = Roth value × (1 − retirement tax) ÷ (1 − current tax) · Roth wins when retirement tax > current tax
Compared on an equal after-tax cost, the choice reduces to one thing: your tax rate now versus in retirement. A Roth is funded with taxed dollars and withdrawn tax-free; a Traditional deducts tax now and taxes withdrawals later. If your rate will be lower in retirement, the Traditional deduction is worth more; if it will be higher, paying tax now with a Roth wins. When the rates match, the two are exactly equal.
Worked example
Investing $7,000 a year for 30 years at 7% grows to about $661,000. In a Roth that whole amount is spendable. A Traditional, funded from the same take-home pay, ends up worth 661,000 × (1 − 0.15) ÷ (1 − 0.22) ≈ $720,000 after tax — so the Traditional wins here because the 15% retirement rate is below the 22% rate today.
Frequently asked questions
Which is better, Roth or Traditional?
It hinges on tax rates. Pick Roth if you expect a higher tax rate in retirement (common for young, lower earners); pick Traditional if you expect a lower rate later (common for high earners in their peak years). When rates are equal the after-tax outcome is identical.
Why compare on "equal after-tax cost"?
A dollar in a Roth has already been taxed, while a dollar in a Traditional has not, so comparing equal nominal contributions is misleading. This calculator assumes the same take-home sacrifice for both, which is the only apples-to-apples comparison.
Can I contribute to both?
Yes. Many savers split contributions to hedge against unknown future tax rates and to gain flexibility over which account to draw from in retirement. The combined total across both is capped by the annual IRA limit.
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Educational estimate, not financial or tax advice. Rules and limits change — confirm current figures with a qualified advisor.