this post was submitted on 07 Jul 2025
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FIRE (Financial Independence Retire Early)
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Apologies, I didn’t intend for this to turn into a wall of text, but I’m posting it anyway. 😅
Usually Roth vs traditional comes down to a judgement call on whether you think it’s more advantageous to pay your marginal tax rate now vs your marginal tax rate in retirement. The optimal answer is unknowable without knowing the future, so you make an educated guess.
People early on in their careers (especially, but not exclusively, where they expect to earn significantly more later) or those who feel that tax rates will be significantly higher in the future during their retirement vs now (eg. you believe taxes are at historic lows and will rise) will often opt for Roth accounts.
Conversely those in a high marginal bracket now who expect to have significantly lower taxes in retirement will often opt for traditional. Indeed if you’re a high W2 earner a traditional 401k is one of the few tax breaks you get.
There’s also something to be said for tax diversification: we don’t know what tax policy will be in the future nor what your income will be in retirement so you can hedge the risk of guessing wrong by putting funds in both Roth and traditional retirement accounts.
People looking specifically at backdoor Roth are usually those who aren’t otherwise eligible to contribute based on income limits.
People looking at mega-backdoor Roth are just lucky (both to have a 401k plan that offers it and to have the money to leverage it).
Regarding a financial advisor: it’s entirely possible to get one-off financial advice for a fee instead of an ongoing commitment or having them manage your assets. The key is to look for a fee-only fiduciary that offers consultations (checkout napfa.org) and not financial “advisors” at banks, brokerages, insurance companies, etc. Those guys aren’t guaranteed to be bad, but they most often double as salesmen who get commission and have a conflict of interest at best.