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  • Jan 15, 2009, 01:57 AM
    sweety13
    Roth Tax saving
    How do I calculate Roth tax saving at retirement.
    Suppose
    Input summary
    Annual retirement plan contribution: $3,600
    Years to invest until retirement plan withdrawals begin: 20
    Hypothetical annual return before retirement: 8%
    Current federal income tax rate: 25%
    Number of annual withdrawals: 20
    Hypothetical annual return in retirement: 6%
    Estimated federal income tax rate in retirement: 25%
    Traditional and Roth accounts: Equal value at retirement
    After 20($InvestmentPeriod) years of contributions and growth, the traditional and Roth accounts would both be worth $177884($TotalContribution) at retirement. Without accounting for taxes, each account could provide annual withdrawals of $14807 in retirement.

    How do u I calculate these values? $177884 and $14807
  • Jan 15, 2009, 07:05 AM
    ebaines

    Are you asking how whoever did this analysis came up with the results? They seem to have simply done a cash flow using the data you provided. The account would indeed grow to $177884 after 20 years of contributions. You can then take withdrawals of $14807 per year, but you woud run out of money after 20 years - this doesn't sound like a very good retirement plan to me.

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