Finances of 2+2ers

[Howard Treesong]

[ QUOTE ]
roth ira: gross income * this year's tax rate * growth rate = final amount

tax deferrerd ira: gross income * growth rate * retirement tax rate = final amount

[/ QUOTE ]

One critical parameter to this is "tax rate." For working stiffs, the current tax rate on active income is rather a bit higher than the tax rate on, say, dividends -- and so if I assume, for example, that I'll continue to make my yearly income when I retire but that I make it via dividends rather than salary, then (assuming things stay the same as they are now) my tax rate will be much lower even though I'm making the same money.

That's of course because the tax rate on qualified dividends is lower than it is for regular income.

I'm somewhat surprised that around 800 people responded to this survey. I would have taken the under to that.