2 Comments

1. 

   Leenkesh Ramlagun on August 25, 2022 at 11:18 am

   Thanks a lot. So clearly explained and easy to follow.

2. 

   Jack on August 25, 2022 at 11:18 am

   This is absolutely awesome. People need to understand how to do this calculation and apply it to their own situation.
   Traditional 401k is the best way to start building wealth. Don’t underestimate the value of the Roth however I would not even start thinking about the Roth until you can max out that traditional 401K limit. You do have the ability to do $6,000 Roth IRA in conjunction with the traditional $19,500 401K (2020 rules).
   By diversifying your investment strategy you have a nest egg for your retirement income while having an additional nest egg for unexpected expenses. You pay income tax on Roth contributions but when you retire (59.5) you don’t pay an income tax.
   Depending on how much you withdraw from your traditional IRA will determine your tax rate. For example single adult withdrawing 40K this year would be subject to about 12% tax rate. So how you withdraw can be just as important as how you save.
   Remember: it is not about how much money you make but how much you keep.