Taxable vs. Tax-Deferred Savings
A 401(k) or traditional IRA lets you put money in before tax and pay the tax later, when you withdraw it. A regular brokerage account works the other way: you invest money that has already been taxed. Which leaves you more depends largely on your tax rate now versus later.
About these numbers
Contributions are made at the end of each year and grow at the rate you enter. The tax-deferred balance is taxed all at once at your retirement bracket, although real withdrawals are usually spread over years and may fall into more than one bracket. In the taxable account, the yearly tax on earnings is applied to all growth each year, and no further tax is assumed when the money is used. State taxes, fees, contribution limits, and employer matches are not included.
This calculator is a hypothetical illustration for educational purposes only. Results are based on the assumptions you enter and the method described above, may vary with each use and over time, do not reflect any specific investment or the deduction of fees or taxes unless stated, and are not a guarantee of future results. The tool does not consider every investment, account type, or strategy that may be available to you. It is not investment, tax, or legal advice. Investing involves risk, including possible loss of principal. 4:8 Financial does not provide tax or legal advice; please consult your CPA or attorney regarding your specific situation.
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