Tuesday, March 19, 2019
Should You Invest in a 401(k) or Roth 401(k)?
twocents.lifehacker.com: As with a Roth IRA, the main considerations for a Roth 401(k) are your income and age. Roths are more valuable for people in lower income brackets (likely at the beginning of your career), because you invest after-tax money, which then grows tax-free. With a traditional 401(k), you’re contributing money before you pay taxes on it, so you have to pay up when you take disbursements in retirement.
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From what I can tell, it would be more beneficial for me to invest in a Roth 401(K). I like the fact that it can grow tax free, as taxes will only continue to go up as the years progress. By investing money early, the money can grow without ever being affected by changes in policy and time. Also, if I continue on this path in the creative world, I most likely won’t be making huge amounts of money. The article recommended a Roth 401(K) for lower earning brackets, which probably includes an artist’s salary. Clearly this it’s not so simple as just making an arbitrary choice based off of one article. I would love for CMU to offer a class, or even a StuCo, on adult things like retirement and taxes. I think I read once that if you start investing before the age of twenty as compared to after twenty, you increase your profits by something crazy like twenty five percent. Right now, I haven’t even thought about getting a job and thinking about investing in my retirement seems ridiculous, but it’s probably a good idea to start soon.
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