Saving for retirement is something every worker should take seriously. Social Security is under financial strain, and the program’s trustees project that its cash surplus will run out in 2034, after which it would be able to cover only about 83% of scheduled benefits. Even if no cuts ever happen, Social Security is only designed to replace about 40% of the average worker’s pre-retirement earnings. Most financial advisors recommend targeting 70% to 80% of pre-retirement income to maintain your standard of living, which means personal savings must close a gap that Social Security simply was not built to fill on its own.
When it comes to retirement savings, most workers have choices. A traditional 401(k) is the most common employer-sponsored option. But ask author, radio host, and podcast host Clark Howard, and he will tell you that a Roth IRA or a Roth 401(k) makes far more sense for most people, and he has specific reasons for that view.
Why Howard loves Roth accounts
On a recent show, Howard said, “I’m obsessed with the Roth as a way to save for retirement.” His core argument is simple: save $1 in a Roth IRA and you keep $1 in retirement. Save that same dollar in a traditional 401(k) and you will keep something less, because every withdrawal will eventually face income tax. The question is not whether you will pay taxes on your retirement savings. The question is whether you pay now or later.
Nobody can say with certainty what tax rates will look like decades from now. Congress permanently extended the Tax Cuts and Jobs Act individual income tax rates when President Trump signed the One Big Beautiful Bill Act on July 4, 2025, locking in today’s seven brackets. Even so, Howard’s core point stands: future Congresses can always raise rates, and contributing to a Roth at a known rate today insulates savers from that uncertainty. The law also added temporary deductions for tips and overtime pay, effective from 2025 through 2028, but the rate structure itself is now permanent.
Howard also argues that savers accumulate more spendable wealth inside a Roth over a full career because investment gains are never taxed. Contribute the same dollar amount each year to a traditional account versus a Roth, and the Roth produces more after-tax retirement income since withdrawals come out completely tax-free. Fidelity’s Building Financial Futures report for Q4 2025 found that Roth IRAs have become the IRA of choice among Gen X, millennial, and Gen Z investors saving outside a workplace plan, suggesting Howard’s view is gaining mainstream traction. In 2026, workers can contribute up to $24,500 to a Roth 401(k) or up to $7,500 to a Roth IRA, and those limits apply equally to the traditional versions of each account. Savers aged 50 and older can add an extra $1,100 catch-up contribution to a Roth IRA, raising the total IRA ceiling to $8,600 for that group.
Roth accounts also shield savers from a less obvious retirement cost. Required Minimum Distributions (RMDs) from traditional 401(k)s push up your taxable income, which can trigger Medicare Income-Related Monthly Adjustment Amount (IRMAA) surcharges on Part B and Part D premiums. Roth withdrawals do not count toward those IRMAA thresholds, keeping healthcare costs lower. SECURE 2.0 also eliminated RMDs from Roth 401(k)s during the owner’s lifetime, aligning those accounts with long-standing Roth IRA rules.
Higher earners can use a Roth, too
For years, many higher earners faced a practical barrier: their 401(k) plans simply did not offer a Roth option. That has changed substantially. Howard says 90% of companies that offer a 401(k) now give employees the choice between traditional and Roth contributions. Under SECURE 2.0, employers can also optionally direct matching contributions straight into a Roth account rather than a tax-deferred one. A significant new rule took effect in January 2026: workers who earned more than $150,000 in Social Security wages in the prior year must make all age-based catch-up contributions on a Roth basis, so high earners may find themselves shifted into Roth catch-ups automatically. Plans that do not offer a Roth option cannot accept catch-up contributions from affected employees at all until the plan is amended.
Higher earners face a separate obstacle with the Roth IRA specifically, because income phaseouts apply to direct contributions. For 2026, the phaseout range runs from $153,000 to $168,000 for single filers and from $242,000 to $252,000 for married couples filing jointly. The standard workaround is the backdoor Roth: contribute to a nondeductible traditional IRA, then convert those funds to Roth. The strategy works, but it requires careful attention to the pro-rata rule for anyone who holds other pre-tax IRA balances.
High earners with access to an after-tax 401(k) can also pursue the Mega Backdoor Roth. This approach uses the gap between the $24,500 employee deferral limit and the Section 415(c) total plan limit of $72,000 for 2026 (up from $70,000 in 2025), which caps combined contributions from all sources. After-tax dollars can fill that gap and then be converted to Roth status through an in-plan conversion or in-service distribution. Workers ages 60 through 63 can go further still: the SECURE 2.0 super catch-up of $11,250 applies to those four specific years, pushing the theoretical ceiling to $83,250. It is also worth noting that the standard catch-up for workers aged 50 through 59 rose to $8,000 for 2026, up from $7,500 the year before.
Consulting a qualified financial advisor is wise before choosing a strategy, since the right answer depends on your current tax bracket, income trajectory, and overall financial picture.
One more option is worth knowing: you do not have to pick just one account type. Using both a traditional and a Roth account in tandem gives you the near-term tax deduction from traditional contributions alongside the long-term benefit of tax-free gains and withdrawals from the Roth. That combination of tax diversification acts as a hedge against whatever the future tax code looks like when you retire, and it preserves flexibility that no single account type can provide on its own.
Editor’s note: This article was updated to add context on the Social Security trustees’ 2034 trust fund depletion projection and the 83% benefit coverage level that follows, as well as Fidelity’s Q4 2025 finding that Roth IRAs are the preferred IRA type among Gen X, millennial, and Gen Z investors saving outside a workplace plan.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks