It’s time for another edition of Dollar and Cents. This is where I answer one of your questions.

If you have a question, either use the contact form on the blog or use my Facebook Fanpage.

Here’s today’s question:

I am in my early twenties and I am just starting to save for my retirement however I am only contributing to a traditional 401k with my employer although I
have been thinking about opening a Roth IRA soon as well.

My question is since taxes are more likely to increase in the future (I don’t know call me a pessimist), is there a point in owning a traditional IRA/401k besides for tax deferral/deductions?

Right now, I am in the 15% tax bracket so I am not sure if the traditional 401k is a huge advantage to me right now. Your advice is appreciated.


With each Dollars and Cents video we want to provide some follow up links where you can get some additional information on the topic. If you are interested in learning more on opening a Roth IRA, some of the rules behind the Roth IRA, or how to open a Roth IRA here are some good reads:


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Comments | 2 Responses

  1. Frank says

    Jeff good post, especially when you say there is no right answer.

    There are a few young people in their 20’s who I encourage to do the Roth because they should be saving at least a little bit (form the habit). Their income will go up. Some of these will be paying no tax now, but if they put it in the 401k now they will be paying at least 25% later.

    The other advantage is they can take out their contributions. My son almost needed to do this for a down payment on a house. It could also come into play if you retire early, and need to withdraw cash without penalty.

    I like your videos. I wonder if a chart or some sort of listing (visual) would help emphasize your points. Good work keep it up.

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