Roth or Traditional?

Whether to go traditional or Roth can be a tricky decision. This article strongly argues for Roth. One common reason that people recommend a traditional IRA is that your retirement tax rate may be lower then your working tax rate. The article rightly discounts this advantage because it is difficult to accurately predict what your future tax rate is going to be. One thing you should consider that this article does not mention is how much of a hit to your disposable income are you willing to take to save for retirement. A Roth uses after tax money, so, unless laws change, you can withdraw money in your retirement tax free. Because it's after tax the money you are saving comes directly out of your current disposable income. With a traditional, you use pre-tax dollars. The effect on your disposable income is less because the amount coming out of savings is partially offset by the reduction in taxes. If you can afford to fully hit your retirement saving goals every year, without hurting your day to day budget, then using Roths might be a better option, but if your budget is a bit tighter, it might be a better idea to save more now with the traditional, and then pay a bit more taxes later.