Protecting your Retirement

There is an interesting article Protecting Your Retirement No Matter Who's President which talks about where to keep your money since taxes will most probably increase with the next president. It is good to know that taxes will have to climb quite high, before the 401(k) is not the best option.

Even if your income-tax rate jumps sharply, the 401(k) will likely be the better bet, calculates Allan Roth, a financial planner in Colorado Springs, Colo. Indeed, if you have 15 years to invest, the 401(k) will leave you with more money, as long as your tax bracket doesn't climb above 33%.

They also suggest a "Triple Play" to put money into your 401(k), Roth IRA (if eligible), and buy stock-index funds in your taxable account.

What's the advantage of all this? If income-tax rates rise, that could cut into the value of your 401(k) withdrawals. If capital-gains rates climb, it will hurt your taxable account. And if the income-tax system is ever replaced with a national sales tax, the Roth will lose its luster. In other words, you've spread your tax risk -- and thus you should be in good shape, no matter what Congress does.

Now, I really doubt that the United States will turn to a national sales tax so for me the Roth IRA is a very good option.