Pre-tax balance at retirement
$609,289
After-tax at retirement (est.)
$475,245
Annual tax saved now
$1,680
Total tax saved (25 yrs)
$42,000
At 7% return over 25 years, your $40,000 + $7,000/year grows to $609,289 pre-tax. At a 22% retirement rate, you keep ~$475,245. Each year of contributions saves $1,680 in current taxes.