Trying to decide between a Roth IRA and a Traditional IRA? Here’s my break down of my I’ll never invest with a ROTH IRA. Let’s keep more money in your pocket right now!

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The debate around a Roth IRA and a Traditional IRA is a long standing battle. With a traditional IRA you get to contribute pre-tax but then when you withdraw you are taxed on it. With a Roth IRA it is exactly the opposite, you contribute post-tax but your money grows tax free . Your withdrawals are taken out tax free.

Some people argue that a ROTH IRA is the best way to invest as if you are building wealth and investments then you may be in a higher tax bracket when you retire. IF you are in a higher tax bracket when you retire and can pull investments out tax free you avoid the higher taxes. I under the argument, but I still believe investing with a traditional IRA is the better option.

With a traditional IRA you are investing pre-tax. That means you are saving tax dollars right now! Money today is more valuable then money 30 years from now. I can take those tax savings and invest and grow my wealth. I wouldn’t get those tax savings today with a ROTH IRA.

The 2021 contribution limits are $6,000 per person. That means a married couple can contribute $12,000 in to a Traditional or ROTH IRA. Even if you were only in a 12% tax bracket that is over $1,400 in tax savings! That is a huge chunk of money!

If I took that $1400 in tax savings and invested it at an 8% return for the next 35 years, I would have $275,000 in that account! That’s huge! Since I love real estate, I could even save that money up and put a down payment down on a house. That rental house would be completely paid off after 35 years and would be a wonderful cash flowing rental property making me passive income!

I love legally paying the least amount of taxes as I possibly can. Using a traditional IRA is a wonderful way to do just that….(read more)

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When it comes to retirement planning, one of the most important decisions you’ll make is whether to open a traditional IRA or a Roth IRA. Both offer tax advantages that can help you save for your future, but they have very different implications when it comes to taxes.

A traditional IRA is a retirement account that allows you to contribute pre-tax dollars to your account. This means that when you contribute to a traditional IRA, you can deduct the amount of your contribution from your taxable income for the year. This can be a great way to reduce your taxable income and save on taxes in the short term.

However, the downside of a traditional IRA is that you will have to pay taxes on your contributions when you withdraw the money in retirement. This means that if your tax rate is higher in retirement than it is now, you could end up paying more in taxes than if you had chosen a Roth IRA.

A Roth IRA is a retirement account that allows you to contribute post-tax dollars to your account. This means that when you contribute to a Roth IRA, you will not be able to deduct the amount of your contribution from your taxable income for the year. However, the upside of a Roth IRA is that your contributions will grow tax-free and you will not have to pay taxes on your withdrawals in retirement.

For these reasons, I will never use a Roth IRA. I prefer the immediate tax savings that a traditional IRA offers, and I am comfortable with the fact that I may pay a higher tax rate in retirement. I also like the fact that I can choose when I want to take distributions from my traditional IRA, whereas with a Roth IRA, I am required to take distributions at a certain age.

Ultimately, the decision between a traditional IRA and a Roth IRA depends on your individual financial situation and retirement goals. However, for me, the immediate tax savings of a traditional IRA outweigh the potential tax savings of a Roth IRA, and that is why I will never use a Roth IRA.