About the retirement

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Samantha earns $80,000 and she wants to save $5,000 of it for retirement, which is 10 years away. He can either save it in a taxable savings account, put it into a Roth IRA or put it into a traditional IRA. Suppose that Samantha can receive an annual rate of return of 8 percent and his marginal tax rate is 25 percent. Assume that Samantha’s marginal tax rate will be 25 percent when he retires 10 years later.

By the time she reaches retirement, how much money would she have in each of the options? How much money will she have after-tax if she withdraws all of the money at retirement?

Reference no: EM132029000

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