ROTH 401(k) calculator

[Martha]

Some employers are going to be offering the option of putting part of your 401(k) money into a ROTH 401(k). The link is to a SmartMoney articles that includes a calculator to help you evaluate whether and to what extent to use the Roth option.

http://tinyurl.com/8mx3k

[New Thinking]

The problem with estimators like these are that they ignore Social Security taxation in retirement. If you pay your taxes up front now, you can avoid the taxation of your Social Security benefits during retirement. Instead of paying up to a 46% marginal rate on your IRA withdrawals (due to the forced taxation of SS), you can take tax-free Roth income during retirement and tax-free Social Security during retirement.

You can thus retire to a higher standard of living..or retire earlier.

Also, in my opinion, tax rate HAVE TO RISE to pay for SS, Medicare, and Medicaid for boomers. You saw how difficult SS Reform was to change for future retirees..The only way we pay for boomers is to raise taxes or print more money resulting in higher tax rates or higher inflation.