If one thinks about the future and taxes, debt and national debt, having a lot of your assets in ROTHS makes some sense tax wise. There are many other forms of assets that are taxed, maybe taxed or rates may change etc. even upon death, inheritance etc. so investing in a investment that pays taxes upfront, and then is not subject to taxes can avoid some of that. Sure it could change but probably quite far down on the list as many middle income tax payers are investing in ROTH IRAs. The only negative aspect of ROTH IRAs now is that when cashed they are not taxed but can raise your AGI which can trigger increased taxes on other income sources, but that is minimal compared to the advantages. Also there are a whole host of investment options from very conservative to very aggressive to suit the needs of any investor or the change in age or status.

Bryce

I also have an IRA and if it were up to me, these IRA's would replace almost all pensions, retirement plans, etc. that are kept on employee's behalf. The IRA is yours and stays with you. I worked at several places when I was younger, each had a retirement plan, but those companies no longer exist. If I was ever vested in any of those plans, it doesn't matter now. Somebody else got that money, not me. So promises of a retirement plan often fail to materialize.

I have an IRA, but is not a Roth type. Mine was funded pre-tax, and gets taxed as it is withdrawn. I've never done the math, nor seen the math as to which would be the best choice for someone starting out from scratch. Since it is not taxed going in, with my type, there is more to invest early on, and will grow at a faster rate. Downside is you don't know what the tax rate will be coming out.......but what we also don't know is tax policy when it comes time to start pulling money out of a Roth. Promises are made but then promises get broken. All the noise lately about taxing the unrealized gains has me concerned.

To clarify, I'm 100% in favor of IRA's, just never seen the math as to which is the best option......Roth or the other.

OK, have now done a quick and dirty version of the math. Lo and behold, monthly check at the end is the same....almost to the penny. Not what I expected.

If I was just starting out saving for retirement by using an IRA, I am pretty sure I would go the Roth route. There is absolutely no way that I can even imagine that tax rates will be lower 40 years from now than they are currently.

I agree with HayDay that the prospect of taxing unrealized gains is frightening ! If you want to see a market correction, just propose a tax like that !

My Comments, if you are just starting a ROTH may be OK. For me it never penciled out. I started mine late and stopped it for two reasons. With my companies plan ROTH contributions limit my tax deferred contributions. Working full time puts me in a much higher tax bracket than I will have after I stop working. So tax free appreciation in a ROTH may be offset by the high tax paid on the contribution.

I can get by on social security ($3000 per month). But I continue to work and contribute to a 401k. Who knows if I'll every spend any of the 401k money? I do have a RMD, but I just put that into a stock market account. So save lots as soon as you can, but I wouldn't save to the point of living a frugal lifestyle.

I don't think you will see the federal govt reneg on the tax free status of Roth account withdrawals. Instead, they will accomplish the same result by decreasing your SS payout if your income from retirement investments exceeds a certain ammount. However, if that is what happens it will affect all of your retirement income sources the same way.

Would you use a conservative, high risk, or low risk approach? I'm leaning on a moderate approach. I like diversified portfolios but the low risk high yield portfolio sounds interesting.

If I was 19 years old I would go with a higher risk level. I might buy some SPY, some QQQ and some IWM. Just be aware of some overlap between SPY and QQQ

You guys are awesome, thanks for all the help everyone!

The time to pay taxes on savings is now for sure. We have the lowest rates in recent generations right now. 2025 the tax for individuals will sunset, will it go back to prior or will there be legislation to change? We don't know. I overused pre tax while working as I was a saver and thrifty and my tax bracket or income bracket is actually higher in retirement then while working for me. Some is do to the loss of several deductions like savings, miscell. deductions, charitable deductions etc. so we are converting some to ROTH each year at least until 2025.
For those of us with deferred accounts we also are under two things that create increased income but also taxes. As one's age increases the percentage of RMD increases each year. Also with the new tax law if heirs inherit deferred monies that amount is now to be paid out and taxed in 10 years and not over their lifetimes.

Bryce

White, those sound interesting especially iwm. I'm pushing 40 so I gotta play a little more conservative

That's still very young. If I were in your shoes I would put the largest % in SPY, maybe a bit smaller % in QQQ and the smallest allocation to IWM