Retirement Account Comparison Calculator
Compare a year of contributions to a Traditional account (401(k) or RRSP), a Roth account (Roth IRA or TFSA), and a taxable brokerage account across the decades to retirement, using a fair equal-after-tax-outlay comparison that names the real winner for your current and expected retirement tax brackets.
Enter amounts in USD or CAD; the bracket math is identical in both markets, and the Pro Tip maps each account to its Canadian equivalent. This is a planning estimate, not tax advice. Capture any employer match before optimizing account type, and size the rest of the plan with the Simple Budget Calculator and the retirement starter guide.
After-tax future value: Traditional vs Roth vs Taxable
Five inputs. Results update live with the after-tax retirement value of each account, the winner for your bracket arc, and the gap between them.
Traditional wins by $17,400 over 30 years
A $7,000 after-tax outlay each year for 30 years at 7% grows to about $661,200 pre-tax. Traditional (401(k)/RRSP) is worth $679,000 after tax because you deduct at 24% now and withdraw at 22% later; Roth (Roth IRA/TFSA) is worth $661,200 tax-free; a taxable brokerage nets $593,500 after 15% capital-gains tax on the growth. Your retirement bracket (22%) is lower than today (24%), so Traditional wins: deduct at the high rate now, withdraw at the low rate later.
How to use this calculator
Enter the after-tax money you can set aside each year, the number of years until you retire, your current marginal tax bracket, the bracket you expect in retirement, and your expected annual return. The calculator grows that contribution to retirement under each account type and reports the after-tax value of each, then names the winner. The key honesty in the math is that it equalizes your after-tax outlay: the same take-home dollars buy a Roth contribution outright, a larger pre-tax Traditional contribution (because the deduction comes back to you), or a taxable-brokerage contribution that gets taxed on its growth.
One thing the calculator deliberately does not model: the employer match. That is not an oversight; it is a priority. A match is free money that beats every account-type decision here, so capture it before you optimize Roth versus Traditional. See the Pro Tip and the starter guide for the full order.
The fair comparison, and why it matters
Most Roth-always-wins arguments cheat by contributing the same pre-tax dollar amount to both accounts, which quietly hands the Roth a bigger real contribution. The fair test is to hold your after-tax outlay constant:
- Roth. Your $7,000 of take-home money goes straight in. It grows to its future value, and nothing is owed at retirement, so the after-tax value equals the full balance.
- Traditional. That same $7,000 of take-home corresponds to a larger pre-tax contribution, because the deduction refunds the tax you would have paid. At a 24% bracket, $7,000 after tax is $7,000 / (1 - 0.24) = about $9,210 pre-tax going in. It grows, and at withdrawal the whole balance is taxed at your retirement bracket.
- The algebra collapses to one factor: Traditional after-tax value = Roth value x (1 - retirement bracket) / (1 - current bracket). When the retirement bracket is lower, that factor is above 1 and Traditional wins; when it is higher, the factor is below 1 and Roth wins; when they are equal, the factor is exactly 1 and the two tie to the dollar.
- Taxable brokerage. Funded with after-tax money like a Roth, but its growth is taxed. At withdrawal you owe capital-gains tax on the gain (final value minus everything you contributed), which is why it trails both sheltered accounts and sits last in the priority order.
US accounts and Canadian equivalents
- Traditional (deduct now, taxed later). US: 401(k) and Traditional IRA. Canada: RRSP. Best when your bracket today is higher than it will be in retirement.
- Roth (after-tax now, tax-free later). US: Roth IRA and Roth 401(k). Canada: TFSA. Best when your bracket today is lower than it will be in retirement, and a useful hedge against not knowing future tax rates.
- 2026 US limits. 401(k): $23,500 employee plus a $7,500 catch-up at 50+ (up to $31,000). IRA (Roth or Traditional): $7,000 plus a $1,000 catch-up (up to $8,000). HSA: $4,400 individual / $8,750 family, plus $1,000 catch-up at 55+. Roth IRA income phase-out is roughly $146,000 to $161,000 single and $230,000 to $240,000 married filing jointly; above it, the backdoor Roth conversion is the common workaround.
- 2026 Canadian limits. RRSP: 18% of earned income up to $32,490, with unused room carrying forward indefinitely. TFSA: $7,000 per year, cumulative since 2009 (roughly $95,000 of lifetime room if you have been 18+ throughout). FHSA: $8,000 per year, $40,000 lifetime, deductible going in AND tax-free coming out for a first home.
- The third leg in Canada. CPP and OAS form the government leg of the retirement stool. CPP can start as early as 60 (reduced) or as late as 70 (enhanced); OAS starts at 65 and is clawed back above roughly $87,000 of income, which is exactly why TFSA withdrawals (invisible to that test) matter for some retirees.
Why starting early beats everything
The brackets decide the winner, but the horizon decides the size. Because each year's contribution compounds, the dollars you invest in your twenties do far more work than the dollars you invest in your fifties:
- The first decade is disproportionate. At 7%, money roughly doubles every decade. A dollar contributed at 25 has about 40 years to compound and multiplies far more than the same dollar at 45 with 20 years left.
- Time beats timing. Trying to wait for the perfect entry point costs more compounding than the dip you are avoiding. Consistent contributions through good years and bad outperform sitting in cash for almost everyone.
- Run the rate three ways. Because the assumed return compounds, the difference between 5%, 7%, and 9% over 30 years is enormous. Use the calculator at all three to see the realistic range rather than betting the plan on a single optimistic number.
Common mistakes
- Optimizing account type before capturing the match. A 50% to 100% employer match dwarfs any Roth-versus-Traditional edge. Max the match first, every time.
- Trusting the unfair Roth comparison. If a chart shows Roth crushing Traditional at the same bracket, it contributed the same pre-tax amount to both. At equal brackets they are identical; the fair comparison is the one here.
- Leaving the contribution in cash. Putting money in a Roth IRA or TFSA does not invest it; the account holds cash until you place the trade into an index fund. Uninvested contributions earn nothing.
- Ignoring the Canadian benefit-clawback angle. RRSP withdrawals count as income and can trigger OAS clawback or reduce GIS; TFSA withdrawals do not. For lower-income retirees this can outweigh the raw bracket math.
- Betting the plan on 9%. Optimistic returns make any account look great. Plan at 5% to 7% and treat anything above as upside, not the budget.
FAQ
Roth or Traditional: which is better?
The honest answer is a rule, not a slogan: Roth wins when your tax bracket in retirement will be HIGHER than it is now, Traditional wins when it will be LOWER, and the two are mathematically identical when the brackets are the same. The Roth-always-wins claim usually comes from an unfair comparison that contributes the same pre-tax dollar amount to both. The fair comparison equalizes your after-tax outlay: $7,000 of take-home money buys a $7,000 Roth contribution or a larger pre-tax Traditional contribution (because the deduction refunds the tax), and only then are the two compared at retirement. This calculator does the fair version. In Canada the same logic maps onto TFSA (the Roth analogue) versus RRSP (the Traditional analogue).
What comes before choosing an account type?
The employer match. If your workplace plan matches 50% to 100% of contributions up to some percentage of salary, capturing that match is an instant 50% to 100% return that no account-type decision can come close to. Max the match first, then the priority order is: (1) employer match, (2) Roth IRA in the US or TFSA and FHSA in Canada, (3) 401(k) or RRSP beyond the match, (4) taxable brokerage once the sheltered limits are full. The Roth-vs-Traditional question only matters after the match is captured. The retirement starter guide walks through the whole order.
Why does the taxable account lose to both sheltered accounts?
Capital-gains drag. A taxable brokerage account is funded with after-tax money like a Roth, but unlike a Roth its growth is taxed: at withdrawal you owe capital-gains tax on the gain portion (final value minus the total you contributed). This calculator uses a 15% long-term capital-gains rate as a US proxy (0% for very low incomes, 20% for high earners) and roughly half your retirement income-tax rate as a Canadian proxy (the 50% capital-gains inclusion rate). That tax on decades of growth is why the taxable account almost always trails both sheltered accounts, and why it sits last in the priority order, used only after the tax-advantaged room is full.
What return rate should I assume?
The 7% default approximates the long-run real (after-inflation) return of a broad stock-market index. Use 5% for a conservative plan or a bond-heavy allocation, and 9% only as an optimistic upper bound that history does not guarantee. Because contributions compound, the assumed rate moves the final number a lot over 30+ years, so it is worth running the calculator at 5%, 7%, and 9% to see the range rather than betting on a single figure. None of these are guaranteed; markets vary year to year, and the early decade of contributions does the heaviest compounding lifting.
How does this map onto Canadian accounts?
TFSA behaves like a Roth (contributions are after-tax, growth and withdrawals are tax-free), and RRSP behaves like a Traditional account (contributions are deductible now, withdrawals are taxed later), so the same bracket-arc rule applies: TFSA if your retirement bracket will be higher than today, RRSP if lower. Two Canadian wrinkles: first-time buyers should usually fill the FHSA first ($8,000/year, $40,000 lifetime, deductible going in AND tax-free coming out for a first home), and RRSP withdrawals count as income that can trigger OAS clawback or reduce GIS while TFSA withdrawals do not, which nudges lower-income retirees toward the TFSA. The brackets in this tool are US federal rates but work as reasonable proxies for Canadian combined federal-plus-provincial brackets.