Compare a Roth and a Traditional retirement account on equal footing and see which leaves you more money after taxes.
The choice between a Roth and a Traditional retirement account comes down to one question: will your tax rate be higher now or in retirement? Traditional accounts give you a tax deduction today and tax your withdrawals later. Roth accounts are funded with after-tax dollars but grow and come out completely tax-free.
This calculator assumes the same pre-tax outlay for both accounts. A Traditional contribution invests the full amount because it is deductible. A Roth contribution of the same gross amount effectively invests less, because you pay income tax on it first. At retirement, the Traditional balance is taxed at your future rate while the Roth comes out tax-free — so the winner depends entirely on how your two tax rates compare.
Roth comes out ahead when your tax rate in retirement is higher than it is today. That favors younger savers early in their careers, anyone expecting rising income, and people who want tax-free flexibility later. Roth accounts also have no required minimum distributions during your lifetime.
Traditional comes out ahead when your retirement tax rate is lower than your current rate — common for high earners in their peak earning years who expect to draw down modestly in retirement. The upfront deduction also lowers this year's taxable income.
Tip: If your current and retirement tax rates are identical, Roth and Traditional produce the exact same after-tax result. Many savers split contributions across both to hedge against uncertain future tax law.