The United States government created a system that rewards you for deferring your taxes in the early years, but when you retire you had better be ready to pony up for that deferral. To put this in perspective pretend you are the new owner of an orange grove. On the day you planted your first seed, the government came to you offering  the following deal: You can either pay taxes now on each seed you plant today (like a Roth IRA), or wait to pay taxes on every orange you harvest for the rest of your life plus when you are dead, we are going to continue to tax your kids as they continue to pick oranges off these trees you are about to plant (like a traditional IRA). Your choice.

Before Mr. Orchard Farmer makes a decision, he may want to consider that marginal income tax rates are at some of the lowest rates our country has ever known. He might also consider that our national debt is over 16 trillion dollars and growing. The interest alone on our debt is currently our country’s fourth largest budget item. Our social safety net systems like social security and medicare are beginning to get clobbered by the largest generation in history at a time when medical costs are skyrocketing. Instead of trying to figure out ways to cut back, our government is adding to these social safety nets with things like part D prescription drug coverage for seniors and mandatory health insurance for every person in America. We are not trying to reduce the size of these programs instead we are adding to them.

So Mr. Farmer which option will you choose?