Roth vs. Traditional: choosing the right bucket in your 30s and 40s
A simple framework to decide where each new dollar of retirement savings should go.
The Roth-vs-Traditional decision comes down to one question: will your tax rate be higher now, or in retirement?
When Roth wins: you're early-career and your income is below its peak. You expect to earn more later. You believe federal tax rates are more likely to rise than fall over the next 30 years. You want tax-free flexibility in retirement and a Roth account that can pass to heirs tax-free.
When Traditional wins: you're in your peak earning years and a deduction today saves you 32–37%. You'll likely retire to a lower-tax state or a lower bracket. You want to use the tax savings to invest more aggressively today.
The both-buckets answer: most people in their 30s and 40s benefit from contributing to both — capturing tax diversification so they can choose which bucket to draw from each year in retirement based on that year's tax picture.
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