Roth vs Traditional Calculator · filed Oct 10, 2026
Early in your career, Roth is usually the answer
First jobs pay the lowest tax rates of a career — and hand you the longest runway for growth to compound. Both facts push the same way: pay the small tax now and let decades of growth arrive tax-free. This page posts the worked example.
Worked at $7,000 a year for 40 years at 8%, 12% now vs 28% in retirement: $133,823 tax-free in Roth against $109,492 spendable in Traditional — Roth wins by $24,331.
The worked example — $7,000 a year, 40 years, 8%
The $24,331 gap has two parents. First, the rate gap: 12% now versus 28% later is the widest realistic spread, and the verdict is just the rate comparison with compound interest doing the shouting. Second, the time: 40 years at 8% turns each year’s contribution into 21.7 times itself, so the dollars that escape tax grow the most.
This is the case Roth was built for: pay a small bill on a small income, then let the account compound untaxed for a working lifetime. A Traditional deduction at 12% saves only $840 a year — the cheapest deduction you will ever buy, and the least valuable.
The crossover is mechanical: keep choosing Roth while your rate is below your expected retirement rate, and revisit the comparison when raises push you into higher brackets. The calculator stamps the verdict for any pair of rates.
Run your own numbers in the calculator
Posted at the bottom of the sheet
- Should young earners choose Roth?
- Usually yes. Worked example: $7,000 a year for 40 years at 8%, 12% now versus 28% in retirement, ends at $133,823 tax-free in Roth versus $109,492 spendable in Traditional -- a $24,331 win for Roth. The low rate today and the long runway both push the same way.
- What if I am young but already in a high bracket?
- Then run the comparison, not the rule of thumb. A 24-year-old in a 35% bracket with a lower expected retirement rate can still favor Traditional -- the math only cares about the two rates.
- Does the tie rule apply to young savers?
- Yes: if your rate now equals your expected rate in retirement, Roth and Traditional tie exactly, no matter how long the money grows. Time amplifies the rate gap but cannot create one.
- Should I switch to Traditional as my income grows?
- Revisit the pair of rates at every big raise. Many savers do Roth through their 20s and low-bracket years, then shift to Traditional once their marginal rate climbs past their expected retirement rate.
Filed under retirement taxes
- Roth vs Traditional CalculatorPost your own numbers — contribution, rates, years — and get the verdict stamped.
- Should I Do Roth or Traditional 401(k)?The 401(k)-specific version, posted at the 2026 deferral limit of $24,500.
- Roth vs Traditional: Marginal vs Effective RateThe rate mistake that decides the answer — and the one number you should actually use.
- Roth vs Traditional for High EarnersWhen your rate is already the top one: the backdoor and the break-even.
- Roth vs Traditional IRAThe IRA version at the 2026 contribution limit — no employer plan required.