So, each month you have 12% taken out for your 401K and $166 for your IRA -- all of it with pretax dollars. Your employer probably matches your 12% (or a good percentage of it) for your 401K -- with tax deductible dollars. And all of the money in your 401K and IRA compounds tax deferred for the next 20, 30, 40 years. I truly wish that we had had that option. We didn't have any of that at all until our later working years. We had to provide for retirement with AFTER TAX dollars and pay tax on the return from our savings as it was earned. The tax that is not paid on the contributions that you and your employer make to your 401K, the tax not paid on your IRA contributions, and the tax not paid on the earnings from them have to come from somewhere -- it comes from the taxes that we ALL pay, RETIREES INCLUDED. WE are helping to pay for YOUR 401K and IRA. It's a two way street.
