“Defer! Defer! Defer!” is the common tax advice when choosing IRAs and 401Ks, but Ed Slott, the author of “The Retirement Savings Time Bomb Ticks Louder”, encourages facing the tax immediately instead of our current economic factors.  

The total debt of the U.S. government was $34.67 trillion as of June 6th, 2024 an increase of 2.67 trillion from 2023.

“It’s a ticking time bomb. It’s the tax in your IRAs and 401Ks. That money has not yet been taxed. It’s tax-deferred, not tax-free. And with taxes probably going up very soon, a lot of that could be lost when you need the money the most in retirement.” – Ed Slott, Author of “The Retirement Savings Time Bomb Ticks Louder”

The taxes on your retirement savings, outside of a Roth, need to get paid sometime. And with tax predictions looking to increase, Slott recommends embracing Roths for a more financially secure future.  

“Roth IRAs offer more opportunities,” said Slott. “You have the Roth 401Ks, you have even 529 to Roth, Roth Sep, Roth Simple, Roth matching, Roth catch-up. Congress went Roth crazy. Why? Because they need the revenue. They get the money upfront. So let’s take advantage of their shortsightedness.” – Ed Slott, Author of “The Retirement Savings Time Bomb Ticks Louder”

The Roth IRA is an excellent retirement fund option because there are no taxes when withdrawing money, as long as you meet certain criteria. Many people access their retirement funds earlier than initially anticipated. You can escape the 10% penalty fee commonly found in other options by using a Roth IRA. Of course, a comfortable compromise is having both a 401(k) and Roth IRA to help maximize immediate tax breaks while still protecting yourself for retirement.

If you want the best retirement plan, Ed Slott says go for a Roth IRA. By investing in Roth IRAs, you can shield your wealths from potential tax fluctuations in the future, allowing you to feel secure amidst the evolving economic conditions. 

Are you a Roth fan? How do you see the economy increasing in years to come, and should we be worried about our future elderly generations? Let us know in the comments below!