I have come to the conclusion (and please correct me if I'm wrong) that as long as I'm above the 15% tax bracket it is better to use a Traditional IRA until I get older (I'm 27). Point being being that I would have more money to pour in taxable investment accounts right now since a Traditional IRA isn't taxed upfront.
My main questions is: Is it worth recharacterizing my Roth IRA to a Traditional?
jimmy88, welcome to the forum.
See
https://www.bogleheads.org/wiki/IRA_recharacterization for more details on recharacterization (including the option to do so for your 2015 contribution until October 2016).
The answer to the traditional vs. Roth question comes down to your marginal rate while contributing now vs. your marginal rate when you will withdraw. It has nothing to do with "average" or "effective" rates at withdrawal.
So...what do you expect your marginal rate at withdrawal will be? Some things to consider:
- contribution and growth rates
- pension or lack thereof
- Social Security or lack thereof
- likely filing status (e.g., single or MFJ or HOH)
Simplifying assumptions usually include
- use "real" returns (i.e., ignore inflation)
- tax laws (e.g., brackets) don't change