Pay now or pay later in either case as long as you’re alive you’ll have to pay taxes. If you’re dead, your heirs would pay the taxes eventually when the funds are withdrawn. However, not if it was in a Roth IRA account and you’ve had it open for at least 5 years.
I’m in favor of the Roth, but it makes sense for people in the higher tax brackets (32%+) or living in high tax areas to see if it makes sense for their specific circumstances. I think of having the Roth as a hedge or a diversification. While I believe I might be in a higher tax bracket when I retire based on my projections and because I am a “financial mutant”, you never know. What I do know is the current tax rates are set to expire after 2025 and will revert to the prior rates so forget about retirement, I know taxes rates are definitely lower now, at least for me it is.
You can always withdraw your contributions from a Roth IRA account without penalty, it’s just the earnings that are taxable prior to having the account at least 5 years and if you are not older than 59 ½ years old. In your scenario of a college student, if your income is low, you’re probably in one of the lower or lowest tax brackets already so how much are you saving pre-tax? If you’re doing after-tax you’re not being taxed much anyways so the Roth is a no brainer for either the young or people in lower incomes currently who will eventually make more as they reach their prime earning years.
Investment accounts, Roth IRA, or emergency fund. Who says that you have to choose one? If you can, do all three, just in different percentages. If not, set up the emergency fund first, then Roth to start the 5 year count, and then the brokerage.
Most people never think about retirement until they are older. Then one day they wake up and panic. There will always be excuses: 20s you want to enjoy life and can’t even think about retirement 40+ years away, 30s you have a family and then expenses start piling up, 40s you’re have the kids’ college expenses, 50s maybe mid-life crises or you’re the sandwich generation and have to take care of your parents, 60s health goes downhill so it’s medical expenses. You’re already ahead of the game if you’re reading financial blogs/websites. Just start, do a little, and set it on autopilot.
