The Better Choice: Taxable or Non-Taxable Retirement Accounts

Taxes are a part of life, even in retirement.  So when planning your retirement you will be faced with a decision about taxable and non-taxable accounts.  You should understand how each works and which is your best bet to saving a little on taxes you will have to pay.  It will take some figuring, but it is well worth the time spent.  After all, shouldn't you get more of your money than Uncle Sam?

There are many choices when it comes to investment accounts for retirement.  401k plans and IRA's are both examples of accounts where your money is not taxed until it is withdrawn.  The idea behind these accounts is that since they are not taxed upfront you can save more money with them.  They are taxed when you begin withdrawing the money which gives you control over when you will be taxed and even allows you to plan out how much you will be taxed.  Essentially, the taxing control is taken away form the government and given to you. 

The problem is that sometimes the return is not effected by whether the savings are taxed before they go in or not.  It all depends on the interest accumulated.  If the taxable account has a higher interest then you could actually earn more than with a non-taxable account with lower interest.  It is all about numbers and comparisons.  Do your research and choose the best account that gets you the most money.  Don't focus on taxable or non-taxable.

In order to decide if a taxable or non-taxable account is better for your money you simply need to look at the interest rates.  You should compare the accounts and find out in the end which returns the most.  Don't thin of accounts simply by the way they are taxed.  One person may find they prefer taxable accounts where another may prefer non-taxable.  It is all a matter of personal preference and what deals each person gets on interest.  So, the answer to the question about which is better - taxable or non-taxable, is that you have to decide that for yourself.