When a younger worker thinks about retirement, Roth accounts are increasingly the starting point.
Teen and 20-somethings have voraciously scrolled TikTok videos from countless finance influencers explaining why they should open one of these retirement accounts that involve saving after-tax dollars, thereby paying taxes on their long-term retirement savings now.
Inside workplace retirement plans, where most Americans actually save, Roth use is inching upward, but nowhere near as quickly as in Roth individual retirement accounts.
Most Americans do not actively choose how they save for retirement. They accept whatever their employer’s retirement plan automatically enrolls them into. For decades, that has almost always meant traditional pre-tax contributions.
“One of the biggest issues that I see is that as more and more plan sponsors have adopted automatic enrollment, they automatically default everybody to a pre-tax source,” says Jania Stout, president of retirement and wellness at Prime Capital Financial.
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