Retirement plan type comparison

Example model

Description: Will you end up with a bigger nest egg at retirement with a 401(k), traditional IRA, Roth IRA or a normal non-tax-advantaged brokerage account? For example, comparing a Roth IRA to a normal brokerage, intermediate capital gains compound in the Roth, but eventually you pay taxes on those gains at your income tax rate at retirement, whereas in the brokerage you pay capital gains taxes on the gains, which is likely a lower tax rate. So does the compounding outweigh the tax rate difference? What effect do the higher account maintenance fees in a 401(k) account have? How sensitive are these conclusions to the various input estimates? The answers to all these questions depend on your own situation, and may different for someone else. Explore these questions with this model.

Keywords: 401(k), IRA, retirement account, decision analysis, uncertainty, sensitivity analysis, MultiTables.

Author: Lonnie Chrisman, Lumina Decision Systems

Download: Comparing retirement account types.ana.

For a version without the sensitivity analysis part, which has fewer than 100 objects and can thus be modified using Analytica Free 101, you can use this one: Comparing retirement account types without sensitivity.ana.