Maximize your tax-advantaged savings

Next thing on the list is to consider an appropriate combination of tax-deferred and Roth accounts, depending on where is your current tax bracket:

• If you are in a lower tax bracket – 0%, 10%, 12% You should consider maxing out your Roth accounts. As Rob explained, there is a very big chance for your tax bracket in retirement to be equal to or even higher than today, mostly when you consider that tax rates are at the lowest levels we have seen in a lot of time. Generally, workers who are at the beginning of their careers might be in a lower tax bracket than they will be after advancing in their careers.
• If you are in a middle tax bracket – 22% or 24% Consider splitting your retirement savings into two parts: tax-deferred and Roth accounts. It can be even more difficult for people in the middle tax brackets to know what their future tax rates will be, BUT, if you choose to contribute to both types of tax-advantaged accounts, you might in fact alleviate a bit of that uncertainty. If the majority of savings at your workplace are in a traditional 401(k), you might want to diversify with a Roth 401(k), if your employer is able to give you one.
• If you are in a higher tax bracket – 32%, 35%, 37% Now, there is a high chance your tax rate in retirement will be just the same, or maybe lower than it is now, so maximizing your tax-deferred accounts might make more sense.