A Roth is highly beneficial to young professionals in the long term. The idea behind a Roth is that early on in a young person's career, that person will be making less money and his contributions to the Roth are taxed at a low rate. Once the person reaches the age for qualified distributions from the Roth, he will theoretically be taxed at a higher rate (having advanced in his career, making more money, putting him in a higher tax bracket). Since the distributions in a Roth IRA are tax free, the person has saved money by the contributions be taxed at the lower tax rate of the person's younger years.
Correct on all points. That is why I love the Roth IRA, especially with the new loopholes that let you put 55K/year into it by rolling from a SEP IRA into a Traditional, and then into a Roth.
However, that said - when was the last time the government kept a promise? I have doubts that the dollar is even going to be worth much of anything 40 years from now when I start drawing on my nest egg, or that the government won't decide to "dip in" to those tastey retirement accounts when it is hungry for more tax base as the economy continues to deteriorate.
Just look at what happened to the original idea of SS with the SS "trust" fund. Didn't take long for politicians to bleed it dry and turn it into the ponzi scheme that it is today.
Making a deal with the government is like making a deal with a devil. Sure, you'll save taxes, trust us... but we can change the rules however we wish as we go along...
Also some good points.
I am currently putting my money into a Roth 401(k) account that my employer offers. I expect to claim more money at retirement than I am currently claiming. I haven't completely analyzed when I expect that to change, perhaps somehwere in my thirties? But then I expect to have kids to deduct & I'll likely still have a mortgage payment.
It takes a bit of time to figure out which is best and at the end of the day there are a TON of assumptions that go into it, but it's worth having the discussion and there should be someone (such as myself - a retirement actuary) who can help you out. or a financial planner... just keep in mind, the analysis is only as good as the data and assumptions that go into it.
garbage in ... garbage out...
OH, and DON'T put all your eggs in one basket. Leave some retirement money not in bitcoins. We never know when all of us will get distracted by big shiney objects and stop buying bitcoins...
good luck, happy investing.
