A Roth vs. 401k. Who wins? Surprisingly, neither! That's right, they both lose, and for different reasons. When you consider investing in either a Roth or a 401k, you have to consider what you are trying to do. In a few of my other posts, I've discussed why traditional 401ks make for terrible investment solutions.

Just to recap: if you plan on doing well, then a 401k will have you paying back more in taxes than you saved. Forget about the employer match for a moment. Focus on one of the "truths" being hammered into your subconscious mind for a moment. What do we continually hear about retirement? We hear that we'll be in a lower tax bracket. THINK about that for a moment. If that were true, and it could be if you are not saving very much money, it means that you are making less money than you are now. Factor in inflation and it's not a pretty picture.

What I'm trying to say in plain English is that if you are in a lower tax bracket it's because YOUR BROKE! Do you want to be poor in retirement?

Now...there is the other side of the debate on this one. The Roth IRA. The Roth is an interesting creature. It allows you to contribute after tax dollars in exchange for tax-free retirement income. What's wrong with that? Nothing...except the contribution limits. That, and if you make a decent 6 figures, you're never going to see a Roth in your retirement dreams.

The Roth vs. 401k debate is really about which Government sponsored retirement plan is the best. What about non-Government sponsored plans? What about using a good cash value life insurance policy? Life insurance? YES. Look, I've gotten a lot of flack over this, mostly from people who don't know what they're talking about (they aren't in the industry), but a good, properly structured insurance contract is cheap to own and will be able to give you a decent rate of return of around 5% - 7%. In fact, even though life insurance is not an investment, it can bring back investment-type returns.

Since, according to DALBARinc.com, most investors earn less than that over their lifetime, I'd say that that's a good bet, especially since depending on your insurance policy, cash values can be guaranteed.

There are also no contribution limits on insurance policies, and it is not subject to any early withdrawal penalties. Life insurance was around long-before the Roth and has always offered tax-free access to cash values so that you can create an income that you don't have to work for and cannot outlive.

Finally, many major banks and corporations use life insurance as a way to safely conserve money or to build a guaranteed pension. For example, the "king" of cash value insurance, William Ryan of TD BankNorth, has his pension funded by the corporation...his annual premium? $1,260,000.

Successful people use life insurance. Go figure.