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It hugely depends on your tax expectations. For tech workers who typically have high salaries, the 401k is a better solution since it reduces your tax burden.

by milcron 10y ago

It hugely depends on your tax expectations. For tech workers who typically have high salaries, the 401k is a better solution since it reduces your tax burden. If your current tax bracket is rather low, or you expect to be earning lots of money through retirement, then Roth IRA can be a better solution.

ryandrake 10y ago
> If your current tax bracket is rather low, or you expect to be earning lots of money through retirement, then Roth IRA can be a better solution. I think for a typical "geek" who this article is about, rare is the scenario where you expect to be making that much more by (and throughout) retirement to justify taking the tax hit now. Maybe this works for a doctor who's doing residency and still paying for medical school, who eventually expects to be raking it in. But for tech workers our compensation tends to plateau very early and not grow a great deal throughout our careers. I know on a percentage basis, my comp grew more in my first 5 years than it has in the last 15. This scenario would appear to encourage tax-deferred investment.
runamok 10y ago
I was specifically referencing this part of advice: > No 401k Offered: > Open a traditional IRA or a Roth IRA. The traditional IRA contributes pre-tax money, the Roth IRA post-tax money. The upshot is that if you believe your marginal rate at retirement to be higher than your present rate, you should pick a Roth IRA, otherwise, you should pick a traditional IRA. If you don’t feel like forecasting that, take my word for it that 90% of you should have Roth IRAs. I don't see many people where Roth IRA makes more sense than Traditional yet they say 90% should go Roth. Assume I make 100k and I put in $5500 into traditional... I would have to earn about $8000 to have $5500 to put in my Roth IRA after taxes. Having all those years to grow that "extra" money seems much superior to me even if somehow you amass so much money that you are making more in retirement than during your working life UNLESS you suspect future tax brackets will be much higher. I suspect that is a typo and 90% of folks should choose traditional...

by milcron 10y ago

ryandrake 10y ago

> If your current tax bracket is rather low, or you expect to be earning lots of money through retirement, then Roth IRA can be a better solution. I think for a typical "geek" who this article is about, rare is the scenario where you expect to be making that much more by (and throughout) retirement to justify taking the tax hit now. Maybe this works for a doctor who's doing residency and still paying for medical school, who eventually expects to be raking it in. But for tech workers our compensation tends to plateau very early and not grow a great deal throughout our careers. I know on a percentage basis, my comp grew more in my first 5 years than it has in the last 15. This scenario would appear to encourage tax-deferred investment.

runamok 10y ago

I was specifically referencing this part of advice: > No 401k Offered: > Open a traditional IRA or a Roth IRA. The traditional IRA contributes pre-tax money, the Roth IRA post-tax money. The upshot is that if you believe your marginal rate at retirement to be higher than your present rate, you should pick a Roth IRA, otherwise, you should pick a traditional IRA. If you don’t feel like forecasting that, take my word for it that 90% of you should have Roth IRAs. I don't see many people where Roth IRA makes more sense than Traditional yet they say 90% should go Roth. Assume I make 100k and I put in $5500 into traditional... I would have to earn about $8000 to have $5500 to put in my Roth IRA after taxes. Having all those years to grow that "extra" money seems much superior to me even if somehow you amass so much money that you are making more in retirement than during your working life UNLESS you suspect future tax brackets will be much higher. I suspect that is a typo and 90% of folks should choose traditional...