Why the Roth Is Powerful

Contributions are made after tax, but every dollar of growth comes out tax-free in retirement. A $10,000 balance plus $7,000/year at 7% from age 30 to 65 grows to roughly $1.07M — and unlike a Traditional IRA, no tax is due on withdrawals, and there are no RMDs during your lifetime.

The Compounding Advantage

The tax-free growth line is where the Roth shines: in the worked example, more than $900,000 of the $1.07M balance is growth that would be taxed in a Traditional IRA. Because Roth dollars are worth more per nominal dollar than pre-tax dollars, $1M in a Roth effectively outspends $1M in a Traditional IRA at the same nominal value.

Estate and Flexibility Benefits

No RMDs means the account can pass to heirs intact, who can stretch withdrawals over their own lifetimes. Contributions (not growth) can be withdrawn anytime penalty-free, making the Roth a powerful emergency-fund layer. For most young savers, maxing the Roth before a Traditional IRA is the default right answer.