Tony Robbins sends strong message on Roth 401(k)s, Roth IRAs

Preparing for retirement entails tackling a range of complexities, often emphasizing maintaining financial security while sustaining one’s preferred way of living.

Tony Robbins, the author, motivational speaker and philanthropist, has a steadfast belief in the importance of Roth 401(k)s and Roth IRAs in American workers’ retirement savings and he explains some major financial reasons why.

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Key retirement money considerations on which people can take action include estimating future Social Security monthly paychecks, navigating increasing health care expenses, and evaluating the sufficiency of their savings and investments. 

Routine costs such as food, utilities, transportation, and recreational activities also play a significant role in shaping financial plans in retirement.

Related: Dave Ramsey bluntly warns Americans about Social Security

Even amid challenging market conditions, many U.S. employees recognize the importance of retirement savings options such as 401(k) plans and IRAs.

Enrolling in an employer-sponsored 401(k) plan is a reliable strategy for building retirement funds, especially when employers offer matching contributions. With automatic paycheck deductions, this approach ensures consistent and convenient saving, requiring minimal effort from employees.

In 2025, the contribution limit for 401(k) plans has increased to $23,500, up from $23,000 in 2024. Workers aged 60 to 63 are now eligible for higher catch-up contributions, capped at $11,250, compared to the $7,500 limit for workers aged 50 to 59.

IRAs, on the other hand, provide access to a wider range of investment opportunities than many 401(k) plans, which is an important feature for many people. However, IRAs involve more active participation, as users must independently establish accounts and arrange for regular contributions.

For 2025, the IRA contribution limit remains $7,000, with an additional $1,000 catch-up contribution for those aged 50 to 59, catering to late-stage savers.

Given all of this, Robbins takes some time to explain why he recommends people use Roth 401(k)s and Roth IRAs as they plan for their retirement years.

Tony Robbins recommends Roth 401(k)s and Roth IRAs

Robbins points out that conventional wisdom often encourages maximizing contributions to 401(k) plans or IRAs for their tax benefits. The reasoning is straightforward: Every dollar contributed is tax-deductible, allowing individuals to defer taxes until a later time. 

However, Robbins believe that this strategy carries with it a major uncertainty. The future of tax rates remains unknown, making it impossible to predict how much of the savings will be available for personal use down the line.

In his book Money: Master the Game, Robbins shares a discussion he had with one of his senior executives. 

More on retirement:

• Scott Galloway sends strong message on Social Security
• Jean Chatzky cautions U.S. workers on Social Security, retirement money
• Dave Ramsey bluntly warns Americans about retirement 

When Robbins asked him about his 401(k) balance, the executive confidently disclosed that he was nearing $1 million, feeling secure in the belief that he could live off this amount.

Robbins then reframed the question, challenging him to think about how much of that million truly belonged to him after taxes. The thought that state and federal taxes could consume nearly half revealed the reality that a significant portion of his savings belonged to the government.

Robbins explained that Roth 401(k)s and Roth IRAs, because taxes on them are paid up front, are better options than traditional 401(k)s and IRAs. 

Related: Scott Galloway sends strong message on Social Security

Robbins explains the advantages of Roth 401(k)s and Roth IRAs

Robbins wrote that he thinks of Roth 401(k)s and Roth IRAs as if they are legal tax havens in the face of rising tax rates in the future. He offered an analogy with a question.

“If you were a farmer, would you rather pay tax on the seed of your crop or on the entire harvest once you have grown it?” he asked.

Robbins points out that many people misunderstand this concept. There’s a tendency to avoid paying taxes in the present, opting instead to defer them into the future. The common belief is that it’s better to pay taxes later, when the “harvest” comes in. 

But Robbins explains that the truth is that paying taxes up front — on the “seed” rather than the harvest — can be far more advantageous because the amount being taxed is smaller at that stage. A larger harvest will naturally incur higher taxes.

Roth accounts operate on this principle, Robbins clarifies. People pay taxes on their contributions now, depositing the post-tax amount. Once that’s done, they no longer owe taxes — on the account’s growth or on withdrawals. 

This setup shields their savings from future tax increases and, more importantly, gives them clarity on exactly how much they will have available to spend during retirement. 

By taking this approach, people can ensure their financial plans are secure and free from uncertainties tied to fluctuating tax rates.

“With 401(k) contributions being Roth-eligible, people can pay tax today and let their growth and withdrawals be free from the IRS’s grabby paws,” Robbins wrote.

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