Some Blog Site

Not too long ago, I posted this article about someone’s trying to convince me that it would be to my advantage to reduce my 401k contributions and increase my Roth IRA contributions by the same amount. Since then, I have put together a handy-dandy online calculator to compare the scenario for me.  You can click the link in that previous sentence or use the link in the sidebar to the right, under the Pages category.

The goal of the calculator was to show that there is really no difference to me. And it does show that. The amount I have at retirement is the same regardless of the mixture. I will pay slightly more in taxes in the one case, but it does not affect my bottom line.  The key is that in having more in the pre-tax 401k, I will have more take-home pay, which means that I can contribute that extra to a Roth.  Feel free to put various scenarios and situations into the calculator and see how much the mixture of 401(k) and Roth matters.

The real problem with reducing my 401k contribution is that I know I will not be as diligent in saving the money for a Roth IRA as I am with the 401k, since the 401k is done automatically by payroll before I ever see the money.

“Behold, I send you out as sheep in the midst of wolves; so be shrewd as serpents and innocent as doves.”
– Matthew 10:16