Investing in a Retirement Account is Like Taking Out a Loan
Traditional retirement plan contributions come with a loan attached to it with a variable rate of interest, to be determined at a later date by the tax code and your income level.
We all know that traditional retirement accounts get a tax deduction at your ordinary tax rate to the retirement plan contribution limits. We should also know that these account grow tax-deferred and that all distributions are taxed at ordinary rates.
This is a real problem if your goal is to maximize your net worth. In the early years the tax benefit makes it seem like it is the best deal on the planet. But as time passes the math tells a darker tale.