What's better? 401(k) or Roth IRA?
I think it's safe to say most financial planners would agree maxing out a Roth IRA is a better strategy for building long term wealth than contributing to a 401(k). I don't quite understand why this is so...
I see the advantages of both, but it seems to me there would be some benefit to allowing your pretaxed 401(k) investment to compound for long periods of time before withdrawing. Wouldn't that extra 25% to 30% of contributions really help to propel net worth in the long run?
Conversely, I can also see the benefit of a Roth IRA since all the dividends and growth will not be taxed in the future. All the compounding growth is yours to keep.
Also, would age be a significant factor? Maybe younger investors could benefit more from a Roth IRA since there is more time for compounding and no tax burden in the future?
Any ideas or help on this topic would be appreciated. As a 28 year old, the answer to this question could really make a difference in my retirement balance in 35 years.