Firstly, eligibility for a Roth contribution phases out above a certain income. If you're above that, you don't have much choice.
Then, if you assume your expenses now are similar to your expenses in retirement, and you'll retire whenever you have enough investment income to cover your expenses, then:
- If your savings rate is low, a Roth IRA is better (but not all Roth, this means you can't take advantage of the low tax brackets after retirement. See JTP's answer.)
- If your savings rate is high, a traditional IRA is better
"Savings rate" means the percentage of your income that goes to your retirement investments.
This seems like a simple conclusion, why is it so?
Paying taxes now is more expensive than paying taxes later.
Say you owe $1000 in taxes on some gains. If you pay them now, you're out $1000. If you can pay them later, you can invest that $1000 and earn a return. When you eventually pay the taxes you still pay $1000, but you keep the returns. This is called the time value of money.
Since puts the Roth at an initial disadvantage: since you pay taxes up front you start with a smaller investment.
On the other hand, a Roth doesn't tax gains at all. This advantage becomes more significant as more of the account value becomes gains and not principal.
For a high savings rate, retirement comes sooner and the fraction of the retirement account that is gains is less, making the traditional IRA better. A low savings rate implies a longer retirement horizon and more account value from gains, making the Roth better.
Income, and thus tax rates, are lower in retirement
As your savings rate increases, it becomes more true that your tax rate will be lower post-retirement.
As an extreme example, consider a married couple with a combined income of $1,000,000 but annual expenses of only $40,000. Their savings rate is a very high 96%, maybe closer to 94% considered on a post-tax basis.
Pre-retirement, such a high income makes their marginal tax rate 37%, using 2020 tax brackets as an example.
However, this couple needs only $40,000 (after tax) to retire. That makes their marginal rate 22%, assuming the brackets don't change. (Of course, that's a rather big assumption, but it will likely be still generally true that less income will be in a lower bracket.)
So this couple could either:
- contribute to a Roth IRA, paying 37% tax (now), or
- contribute to a traditional IRA, paying 22% tax (later)
That's a big difference, and 37% and 22% are just the marginal rates. The effective rates have an even larger spread, since for the low-income post-retirement scenario a higher fraction of income is in the lower tax brackets, and the standard deduction is more significant relative to overall income.
For a high savings rate, this is an advantage for the traditional IRA.
On the other hand, a low savings rate means income will not decrease very much post-retirement, and the tax rates pre- and post-retirement will be similar. The traditional IRA will still have an advantage in this regard, but it will be small.