| Making the same contribution to different retirement vehicles can make a great difference on the end result.
Placing $2000 in a TAXABLE vs.
TAXABLE, After tax result on the initial investment is $1440 (assumed 28% tax) versus
Interest earned on the 1st year in:
TAXABLE, $172.80 (assumed 12% return)
Taxes on the interest earned
TAXABLE, is $48.38
Thus leaving a 1st year investment of:
TAXABLE, $1564.42
Now let's project this 20 years toward retirement
TAXABLE, After tax is $76,848.70.
Which account would you rather have:
$76,848.70 or
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Tax-Deferred annuity/IRA account.
$2000 for the Tax-Deferred/IRA.
Tax-Deferred annuity/IRA, $240
Tax-Deferred, account $2240.
Tax-Deferred, account is $0.
Now let's project this 20 years toward retirement
Tax-Deferred, $133,985.92
of $133,985.92.
Calculation; account before distributions is $163,397.47 assume 18% tax bracket during retirement leaves a net retirement balance.
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