What is the benefit of tax-deferred investing?

Tax-deferred accounts like traditional IRAs and 401(k)s let your investments grow without being taxed each year on dividends, interest, or capital gains. This means more money stays invested and compounds over time. You pay taxes only when you withdraw the money in retirement — ideally when you're in a lower tax bracket. The longer your time horizon, the more powerful the tax deferral advantage becomes.

Is a Roth or traditional retirement account better?

If you expect your tax rate to be higher in retirement, a Roth (pay taxes now, withdraw tax-free later) is usually better. If you expect a lower rate in retirement, traditional (deduct now, pay taxes on withdrawals later) wins. Many planners recommend having both types for tax flexibility in retirement. This calculator lets you compare the after-tax outcomes of each approach over your specific time horizon.

Retirement

How Much Does Tax-Deferred Growth Actually Add?

Compare Traditional and Roth IRA strategies side by side with year-by-year projections and built-in RMD modeling. See exactly when Required Minimum Distributions override your withdrawal rate, and find the account strategy with the higher lifetime after-tax value.

Current Monthly Payment

—

New Monthly Payment

—

Est. Interest Saved

—

Break-Even

—

Updated for SECURE Act 2.0 — RMDs start at age 73

Contribution & Growth

Annual Pre-Tax Contribution

Annual Return

Years of Growth

yrs

Tax Rates

Current Rate

Retirement Rate

Marginal federal tax rate. Add state rate for a combined estimate.

Tax-Deferred Advantage

+$94,610

over a taxable account after 25 years

Upfront Tax Savings

$45,000

from tax deductions over 25 years

Tax-Deferred (After Tax)

$423,621

22% retirement tax applied

Taxable Account

$329,011

15% annual capital gains tax drag

Account Growth Over Time

Compares the after-tax value of a tax-deferred account against a taxable account with the same economic commitment. The growing gap is the compounding benefit of tax deferral.

Age & Timeline

Current Age

Retirement Age

Life Expectancy

Contributions & Returns

Annual Pre-Tax Contribution

Roth equivalent: $16,100

Withdrawal Rate (% of balance)

Annual rate applied in retirement

Pre-Retirement Return

Post-Retirement Return

Traditional IRA RMDs begin at age 73. If RMD exceeds your withdrawal rate, the higher amount is distributed. Roth IRAs have no RMDs.

Tax Rates

Current Tax Rate

Retirement Tax Rate

Federal marginal rate. Add your state rate for a combined estimate.

Estimated Traditional IRA Lifetime Advantage

$198,934

Lifetime spendable value difference (distributions + remaining balance)

Upfront tax savings

$241,500

from Traditional deductions

Traditional IRA vs Roth IRA Balance

Shows gross account balances over time. The Traditional balance appears larger because it includes taxes owed on withdrawal. Toggle to "After-Tax" for the true comparison.

Traditional IRA Net Value

After-Tax Distributions:$4,419,655

Remaining Balance (net):$1,538,932

Total After-Tax Value:$5,958,586

Roth IRA Net Value

Distributions (Tax-Free):$3,556,048

Remaining Balance:$2,203,604

Total After-Tax Value:$5,759,653

Side-by-Side Comparison

Metric	Traditional	Roth	Difference
Total Contributions(pre-tax vs after-tax)	$805,000	$563,500	-$241,500
Balance at Retirement	$3,402,010	$2,381,407	-$1,020,603
Total Distributions	$5,892,873	$3,556,048	-$2,336,825
Taxes Paid on Distributions	$1,473,218	$0	+$1,473,218
After-Tax Distributions	$4,419,655	$3,556,048	-$863,606
Final Balance (age 95)	$2,051,909	$2,203,604	+$151,695
Total Lifetime Net Value	$5,958,586	$5,759,653	-$198,934

Annual Cash Flows — Traditional IRA

Age	RMD	Starting Bal.	Contribution	5% Dist.	RMD Excess	Growth	Ending Bal.
30	—	$0	$23,000	—	—	$1,610	$24,610
31	—	$24,610	$23,000	—	—	$3,333	$50,943
32	—	$50,943	$23,000	—	—	$5,176	$79,119
33	—	$79,119	$23,000	—	—	$7,148	$109,267
34	—	$109,267	$23,000	—	—	$9,259	$141,526
35	—	$141,526	$23,000	—	—	$11,517	$176,042
36	—	$176,042	$23,000	—	—	$13,933	$212,975
37	—	$212,975	$23,000	—	—	$16,518	$252,494
38	—	$252,494	$23,000	—	—	$19,285	$294,778
39	—	$294,778	$23,000	—	—	$22,244	$340,023
40	—	$340,023	$23,000	—	—	$25,412	$388,434
41	—	$388,434	$23,000	—	—	$28,800	$440,235
42	—	$440,235	$23,000	—	—	$32,426	$495,661
43	—	$495,661	$23,000	—	—	$36,306	$554,968
44	—	$554,968	$23,000	—	—	$40,458	$618,425
45	—	$618,425	$23,000	—	—	$44,900	$686,325
46	—	$686,325	$23,000	—	—	$49,653	$758,978
47	—	$758,978	$23,000	—	—	$54,738	$836,716
48	—	$836,716	$23,000	—	—	$60,180	$919,896
49	—	$919,896	$23,000	—	—	$66,003	$1,008,899
50	—	$1,008,899	$23,000	—	—	$72,233	$1,104,132
51	—	$1,104,132	$23,000	—	—	$78,899	$1,206,031
52	—	$1,206,031	$23,000	—	—	$86,032	$1,315,063
53	—	$1,315,063	$23,000	—	—	$93,664	$1,431,728
54	—	$1,431,728	$23,000	—	—	$101,831	$1,556,559
55	—	$1,556,559	$23,000	—	—	$110,569	$1,690,128
56	—	$1,690,128	$23,000	—	—	$119,919	$1,833,047
57	—	$1,833,047	$23,000	—	—	$129,923	$1,985,970
58	—	$1,985,970	$23,000	—	—	$140,628	$2,149,598
59	—	$2,149,598	$23,000	—	—	$152,082	$2,324,680
60	—	$2,324,680	$23,000	—	—	$164,338	$2,512,018
61	—	$2,512,018	$23,000	—	—	$177,451	$2,712,469
62	—	$2,712,469	$23,000	—	—	$191,483	$2,926,952
63	—	$2,926,952	$23,000	—	—	$206,497	$3,156,448
64	—	$3,156,448	$23,000	—	—	$222,561	$3,402,010
65	—	$3,402,010	—	($170,100)	—	$161,595	$3,393,505
66	—	$3,393,505	—	($169,675)	—	$161,191	$3,385,021
67	—	$3,385,021	—	($169,251)	—	$160,788	$3,376,558
68	—	$3,376,558	—	($168,828)	—	$160,387	$3,368,117
69	—	$3,368,117	—	($168,406)	—	$159,986	$3,359,697
70	—	$3,359,697	—	($167,985)	—	$159,586	$3,351,297
71	—	$3,351,297	—	($167,565)	—	$159,187	$3,342,919
72	—	$3,342,919	—	($167,146)	—	$158,789	$3,334,562
73	$125,833	$3,334,562	—	($166,728)	—	$158,392	$3,326,225
74	$130,440	$3,326,225	—	($166,311)	—	$157,996	$3,317,910
75	$134,874	$3,317,910	—	($165,895)	—	$157,601	$3,309,615
76	$139,646	$3,309,615	—	($165,481)	—	$157,207	$3,301,341
77	$144,163	$3,301,341	—	($165,067)	—	$156,814	$3,293,088
78	$149,686	$3,293,088	—	($164,654)	—	$156,422	$3,284,855
79	$155,680	$3,284,855	—	($164,243)	—	$156,031	$3,276,643
80	$162,210	$3,276,643	—	($163,832)	—	$155,641	$3,268,451
81	$168,477	$3,268,451	—	($163,423)	($5,054)	$154,999	$3,254,973
82	$175,944	$3,254,973	—	($162,749)	($13,196)	$153,951	$3,232,980
83	$182,654	$3,232,980	—	($161,649)	($21,005)	$152,516	$3,202,842
84	$190,645	$3,202,842	—	($160,142)	($30,503)	$150,610	$3,162,806
85	$197,675	$3,162,806	—	($158,140)	($39,535)	$148,257	$3,113,388
86	$204,828	$3,113,388	—	($155,669)	($49,159)	$145,428	$3,053,987
87	$212,082	$3,053,987	—	($152,699)	($59,383)	$142,095	$2,984,000
88	$217,810	$2,984,000	—	($149,200)	($68,610)	$138,310	$2,904,500
89	$225,155	$2,904,500	—	($145,225)	($79,930)	$133,967	$2,813,312
90	$230,599	$2,813,312	—	($140,666)	($89,934)	$129,136	$2,711,848
91	$235,813	$2,711,848	—	($135,592)	($100,220)	$123,802	$2,599,837
92	$240,726	$2,599,837	—	($129,992)	($110,734)	$117,956	$2,477,067
93	$245,254	$2,477,067	—	($123,853)	($121,401)	$111,591	$2,343,403
94	$246,674	$2,343,403	—	($117,170)	($129,504)	$104,836	$2,201,566
95	$247,367	$2,201,566	—	($110,078)	($137,289)	$97,710	$2,051,909

Shaded rows indicate retirement years. RMD Excess shows the additional distribution required when RMD exceeds the 5% withdrawal rate.

About This Analysis

This calculator provides estimates based on the inputs you supply. It assumes constant tax rates and returns throughout each phase. It does not account for income limits, phase-outs, catch-up contributions, early withdrawal penalties, or state-specific tax rules. RMD calculations use the IRS Uniform Lifetime Table (2024). Traditional IRA distributions are assumed to be fully taxable. Results are for informational and educational purposes only and should not be considered financial or tax advice. Consult a qualified professional before making retirement account decisions.

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How Much Does Tax-Deferred Growth Actually Add?

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