Sometimes we have to make small sacrifices to have a better future. Passing on buying a pair of shoes might seem very hard to do, but investing that money towards your 401K will be so much more rewarding in the long run. The best way to invest in your future, is to convert your 401(k) or traditional IRA into a Roth IRA. The current disadvantage is that you will have pay taxes on the amount you invest, but if you convert a small portion at a time, it won’t be that bad.
How is a Roth IRA different from a traditional IRA in the long run? Since you have already paid taxes on a Roth IRA, when retired, you get to take out all the money in your Roth without paying any tax on it. It is better to pay taxes now rather than later because there is every reason to believe that tax rates are going to be higher in the future. If the account has been open for at least five years and you are 59 1/2 when you take it out, your money will not be taxed. Another bonus, you can always withdraw any money you originally contributed to your Roth at any time without any penalties. Only the growth must stay until you reach the specified age. Also you are not required to make any withdrawals unlike with the traditional 401K, you can leave the money growing and eventually pass it along your heirs as a tax-free inheritance.
A small sacrifice today such as investing a small portion consistently and paying taxes now on a Roth IRA, will yield significant gains in the future.