After 40 years at 7%, the Roth IRA leaves you ahead after taxes.
- 01 Roth IRA $0
- 02 Traditional IRA $0
- 03 Brokerage $0
Change your bracket or your timeline on the first step and watch the order change.
Both IRAs keep the IRS away from your growth until you take the money out, or for good. A regular brokerage account doesn't, and the yearly tax bill compounds against you for decades. Put in your age, income and what you can save each year, and see which of the three leaves you with the most after tax.
Start with your age, your income and what you can put away each year. The other five steps are worked out from these.
After 40 years at 7%, the Roth IRA leaves you ahead after taxes.
Change your bracket or your timeline on the first step and watch the order change.
Both IRAs almost always beat a taxable brokerage because tax drag compounds against you for decades. Between the two IRAs: if your retirement tax bracket will be higher than today, Roth wins. Lower, Traditional wins.
Where every dollar goes in each account, from what you put in to what the IRS takes out.
All three accounts get the same annual dollar contribution. Traditional and Roth compound at your expected return. The taxable brokerage compounds at an effective after-tax yield of return × (1 − marginal rate), a simplification of ongoing taxes on dividends and realized gains.
At retirement, Traditional is taxed at your estimated retirement rate, then the cumulative tax savings you pocketed from each year's deduction are added back uncompounded (matching the original FinMango model). Roth withdraws tax-free. Brokerage keeps what it has.
Your marginal rate comes from the 2026 IRS brackets. Your retirement rate is estimated as your current marginal rate minus 2 percentage points, a common rule of thumb rather than a prediction. Income grows 3% per year; once it crosses the 2026 Roth MAGI phase-out ($153K–$168K single / HoH, $242K–$252K joint), Roth contributions phase down proportionally while Traditional and Brokerage keep going. The model assumes constant contribution limits and doesn't model state tax, ACA subsidies, or required minimum distributions on Traditional at age 73.
Both IRAs let your money grow without paying tax on the gains every year. A regular brokerage doesn't, and that drag compounds against you for decades.
You contribute pre-tax dollars and lower this year's tax bill. The money grows untouched by the IRS for decades, but every dollar you withdraw in retirement is taxed as income.
You contribute money you have already paid tax on. It grows tax-free, and every dollar you withdraw in retirement, including decades of gains, is yours. The IRS does not touch it.
A regular brokerage account (Fidelity, Vanguard, Schwab, Robinhood) has no income limits, no contribution limits and no withdrawal rules. But the IRS taxes your dividends every year and your capital gains every time you sell. Over 30 or more years, that drag usually costs you tens of thousands compared with an IRA.
The math above is one input. Your career stage and your read on future tax rates are the others.
You can put $7,500 a year into IRAs, or $8,600 once you're 50, which includes a $1,100 catch-up. The limit is shared across all your IRAs. Roth contributions start phasing out at $153,000 of income for single and head-of-household filers and end at $168,000. For joint filers the range runs from $242,000 to $252,000.