A Roth IRA is actually provides a tax free shelter for your invested earnings, but you can’t get a yearly tax deduction when you invest in them. Over a long period of time however, a Roth IRA can give a bigger pot of cash for your later years. Using the same example in the last post, where you start saving $3000 a year at age 30 until you are 65 years old – with a current tax rate of 25% and an estimated rate of return at 9% and a $40,000 yearly salary your results would be as follows: Your Roth IRA could be worth $705,374 at retirement. An ordinary taxable savings account would be worth $419,281. Notice how the standard IRA saving account only saved a total of $314,000 when the Roth IRA results in $419,000.
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