The $80,000 Question Most Savers Never Ask
Meet Dana. She's 35, contributes the full $7,500 to an IRA every year, and feels like she's doing everything right. She's never decided one thing, though: Traditional or Roth? Her brokerage opened a Traditional account by default, so that's where the money goes. Quick question — does she know what that default actually costs her?
Here's the math she's avoiding. Say her contributions grow at 7% a year until she's 65. Both account types land on roughly the same gross balance: about $735,000. That's where most online comparisons stop, and that's the trap. The number on the statement looks identical, so it feels like the choice doesn't matter. It matters enormously. The two accounts are taxed at opposite ends of the journey, and that single difference is worth more than most people save in a decade.
In the Traditional IRA, Dana deducted every contribution, so she never paid tax on that money going in. Every dollar she pulls out in retirement is taxed as ordinary income — the original contributions and all the growth. In the Roth, she flipped the order. She paid tax on the contributions up front, out of money she'd already earned. In exchange, every dollar of that $735,000, including the roughly $510,000 of pure growth she never paid a cent of tax on, comes out completely tax-free.
Now run the withdrawals. If Dana lands in a 22% tax bracket in retirement, that Traditional balance is really worth about $573,000 after the IRS takes its cut. The Roth is worth the full $735,000. That's a $162,000 swing sitting underneath two accounts that looked identical on the statement. Same contributions. Same growth. Same starting point. The only difference was a setting nobody asked her about.
This is the math the default account setting hopes you never do. And the right answer isn't always Roth — if Dana expects a much lower tax rate in retirement than she pays today, the Traditional deduction now can come out ahead, because she'd be trading a high-rate tax bill today for a low-rate one later. The point is that picking the account type is a five-figure decision, not a coin flip you can ignore. This calculator runs both paths against your own numbers so you can see the after-tax balance, not just the headline figure. Change the contribution, the growth rate, or your retirement tax bracket and watch which account pulls ahead — then make the call on purpose instead of by default.