Zared has a question.

My wife and I are 33 and 30 and we're saving 50% of our income.

Our federal and state tax rate is 33%.

Would you still recommend traditional versus Roth contributions in our 401k if we have

this high savings rate?

We cannot, Zared, make specific financial recommendations to you in your life without

knowing you're overall financial situation.

Here's what we can tell you though.

At a 33% federal and state tax rate, my marginal tax bracket, every dollar that you put

into your 401k and the pre-tax side will save you 33 cents in taxes.

You can think about that as sort of like an imputed 33% rate of return right off the

bat.

We cannot say what's specifically makes sense in your situation.

That is a really tough rate of return, tax savings, whatever you want to call it, to walk

away from even though you're young, even though you're 33 and 30, even with the savings

rate.

Because you think about if you're maxing that out, if your number is like $22,500, you're

putting in your 401k, 33% of that amount will be saved in taxes by doing pre-tax.

That's why we love, once you get above those 30s, we like to focus on the price.

The pre-tax side over the raw side when it comes to 401k.

That's just a federal rate, by the way, because then if you had the state, I mean, think

about California 10, 12%.

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