Clark Consumer Action Center, Daniel, Clark discussed on Clark Howard Show

Automatic TRANSCRIPT

Of this podcast, we're going to talk with our team Clark director to find out what things are really troubling people right now, what questions they really have in our team Clark consumer action center. But first, without further ado, drum roll, please. I should have never encouraged these. You must think, I'm pretty stupid. You should be ashamed of yourself. Well, maybe I'm wrong. Maybe I'm wrong. Maybe you're right, pal. Okay, we're gonna start with this one from Daniel. You tell Roth IRA's continuously but never note that the math is the same whether you place money in a traditional IRA or a Roth IRA with a Roth you place in post tax dollars and then do not get taxed some withdrawals for a traditional, you pay with pre-tax dollars. If you invest the tax money saved on a traditional IRA, then you end up over the years in the same place as a Roth, the Roth IRA is only a bet that the tax rates will be lower in the future, but no one knows what the future tax rates will be. The other issue no one mentions is that Congress could change the tax law and make Roth IRA withdrawals taxable. That would be double loss as you would be taxed on the way in and the way out with the deficit growing the politicians could see the Roth IRAs is a big pot of money to be taxed. Do you trust politicians to keep their word and that's from Daniel? Daniel, okay, so first of all, you don't know that I am a sly sinister character. Why is it that I would love the Roth IRA so much more than a traditional? Because the limits on contributions are such, what you can contribute in a year that if I get you to do the Roth IRA, you're effectively contributing roughly 30% more towards your retirement than if you do traditional. Since your capped at 6000 bucks a year, if I get you up to the cap and you do a traditional, you end up effectively with 30% less money down the road than you do with the Roth. Because you can put in more money. And with the deficits you referred to, the odds are higher down the road that we will have higher tax rates, meaning that the Roth is potentially a better deal tax wise..

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