Roth vs Traditional break-even calculator
Compare after-tax outcomes for a Roth and a Traditional contribution, and find the retirement tax rate where they tie. Both sides use the same growth factor, because it cancels: the decision is two tax rates, as derived in the bracket math article.
What decides it
Only the two rates. The growth factor multiplies both sides identically, so the return and the time horizon drop out of the comparison entirely; they change how big the pot is, not which account wins. Traditional wins when the withdrawal rate is lower than today's rate, Roth wins when it is higher, and the two tie exactly when the rates match.
The comparison assumes the tax you save today actually gets invested. Contribute pre-tax and spend the refund, and Traditional loses even when the bracket math says it should win. Contribution limits are the other exception: if you are maxing out, a dollar of Roth room holds more after-tax money than a dollar of Traditional room.
Assumptions
- Marginal rates on both ends, not average rates. The withdrawal rate is the rate on the withdrawn dollars, which stacks on top of Social Security and any other income.
- Qualified withdrawal after 59½, no penalties, no state tax, no employer match effects.
- Identical investments and identical growth in both accounts.
- Illustration only, not advice. See the disclaimer.