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Roth vs. Traditional Retirement Maximizer

The biggest retirement decision isn't how much to save, but whether to pay taxes on that money *now* or *later*. Use this calculator to compare the final, after-tax purchasing power of a **Roth** (tax-free withdrawal) versus a **Traditional** (tax deduction today) account.

💰 Investment Details

Annual Retirement Contribution (Rs)

Years until Retirement

Annual Investment Return (%)

*The maximum annual contribution is assumed to be the same for both accounts (Rs 1,00,000).

📉 Tax Rate Comparison

Current Marginal Tax Rate (%)

Expected Retirement Tax Rate (%)

Tax Bracket Differential (%)

*The key is which rate is higher: your Current Rate (Roth cost) or your Retirement Rate (Traditional cost).

Final After-Tax Retirement Value in 25 Years

After-Tax Value: ROTH (Tax Now)

Rs 0

After-Tax Value: TRADITIONAL (Tax Later)

Rs 0

The Difference

Rs 0

How much more purchasing power the winning account provides.

Winning Strategy

Calculate Above

The account that maximizes your final take-home money.

Enter your contribution and tax details above to see the winning tax strategy.

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The Core Difference: Tax Rates Now vs. Later

The fundamental principle behind the Roth vs. Traditional debate is that if your **current tax rate is lower** than your expected tax rate in retirement, you should choose the **Traditional** account (take the tax break now, pay the tax later when the rate is lower). Conversely, if your **current tax rate is higher** than your retirement rate, you should choose the **Roth** account (pay the higher tax now for completely tax-free growth later).

How the Calculation Works

The two strategies are compared by ensuring the **true capital outlay** is equal. For a fair comparison, the amount you contribute is normalized to the **after-tax contribution** amount.

1. **Roth Contribution:** The contribution amount is made *after* tax, so your investment is: $C \times (1 - T_{Current})$. The final withdrawal is 100% tax-free.
2. **Traditional Contribution:** The full contribution is made *pre-tax*. However, the tax savings (the tax you *didn't* pay) must be invested in a side brokerage account to make the comparison fair. This side investment is: $C \times T_{Current}$. The final Traditional balance is then taxed at $T_{Retirement}$.

The Fair Comparison Formula (Future Value):

Future Value (Annuity):

$$FV = P \times \frac{((1 + r)^n - 1)}{r}$$

Where $P$ is the annual contribution, $r$ is the annual return, and $n$ is the years to retirement.

Final After-Tax Roth Value:

$$FV_{Roth} = [ (C \times (1 - T_{Current})) \text{ is invested for } n \text{ years} ]$$

Final After-Tax Traditional Value:

$$FV_{Trad} = [ (C \text{ is invested for } n \text{ years}) \times (1 - T_{Retirement}) ]$$

Note: The model in this tool uses the simpler, more powerful method where the tax savings from the Traditional contribution are invested in a *taxable* account.

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