Many of my clients split their retirement investments between traditional pre-tax 401(k) or IRA contributions and the Roth option. While adding to the Roth will not do anything to reduce your current taxes, the idea is that you can withdraw tax free in retirement. Here is the rub, what if you are in a lower tax bracket in retirement? Sure, the withdrawals from the Roth are tax free, but you may end up with more spendable using the traditional route if you are in a lower tax bracket during your retirement years.

It is a hard call to make while you are still working as we have no idea what will happen with taxes, which is the biggest unknown we have to deal with in planning. My advice is to do what makes you feel most comfortable, Roth or Traditional, at least you are saving for your retirement.

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