I typically tell my clients to put a good chunk of money away in their 401K, at your age probably about 10-15% of income, even if your company doesn't match. The reason being that it reduces your taxable income. Also if you are regularly deducting the contribution from your paycheck you could potentially benefit from the ups and downs in the market.
A lot of my clients get bonuses and with that money I encourage them to open a Roth. This helps diversify their tax burden.
I don't think it's an either/or, but rather both that you want.
You can visit my site (www.money-questions.com) and under the Research tab there are calculators that can help you determine whether it makes more sense to invest in a Roth vs. Traditional IRAs.
If you believe that income tax rates will rise in the future and you will be in a higher income tax bracket in retirement, then you might want to reduce your 401K contribution to 8-10% and use the difference to fund a Roth.
There are a lot of individual factors that go into that decision. |
