Roth IRA vs. Traditional IRA: Which Route is Faster?

Photo by Harli Marten on Unsplash

When you retire, you want to make sure your expenses are covered, even though you’re no longer earning a steady paycheck.

Two popular ways to save for retirement are Roth IRAs and Traditional IRAs.

In this post, we are going to work backwards, we will start with how much money we need at the time of retirement and then we will see, how much time it takes in each of these options to meet your targets.

Quick Refresher

Before we move deeper into the topic, here is quick refresher on IRA and its types — Traditional and Roth.

What is an IRA?
An IRA (Individual Retirement Account) is a special account that helps you save for retirement with certain tax benefits.

What is a Traditional IRA?

• You typically contribute pre-tax money (you may get a tax deduction now).
• You’ll pay taxes when you withdraw the money in retirement (on both contributions and earnings).

What is a Roth IRA?

• You contribute after-tax money (no deduction now).
• Your qualified withdrawals in retirement are tax-free.

How Much Do You Need in Retirement?