Roth IRA Calculator – Estimate Retirement Savings Growth
Project the tax-free future value of a Roth IRA.
About the Roth IRA Calculator
What is the Roth IRA Calculator?
A Roth IRA calculator projects the future value of a Roth IRA, where contributions are made with after-tax money and qualified withdrawals are tax-free.
Why use this calculator?
A Roth IRA is especially valuable if you expect higher taxes later or want tax-free income in retirement. Projecting the balance shows the power of decades of tax-free compounding.
How to use it
- Enter your current balance and annual contribution.
- Enter an expected return and the years until retirement.
- Add your marginal tax rate to see the tax-free advantage.
Formula
FV = balance×(1+r)^n + Σ contributions compounded to retirement.
Subject to annual IRS contribution limits and income eligibility rules. Growth and qualified withdrawals are tax-free.
Frequently Asked Questions
Roth versus traditional IRA?
A Roth is funded with after-tax money and grows tax-free. A traditional IRA may give a deduction now but is taxed on withdrawal. The better choice depends on your tax rate now versus later.
Are there income limits for a Roth IRA?
Yes, contribution eligibility phases out at higher incomes. Backdoor Roth conversions are a common workaround.
What is compound interest?
Compound interest is interest earned on both your original money and on previously earned interest. Over time it can make savings grow much faster than simple interest.
What is the difference between nominal and effective return?
The nominal return ignores compounding within the year, while the effective (annualised) return accounts for it. The effective figure is usually higher and better reflects real growth.
How does inflation affect my returns?
Inflation erodes purchasing power. The real return is the nominal return minus inflation, so an investment can grow in dollars yet still lose value in what it can buy.
What rate of return should I assume?
A common long-term assumption for a diversified stock portfolio is about 6% to 8% per year after inflation, but returns vary and are never guaranteed.
Does this account for taxes and fees?
Unless stated, the tool shows pre-tax, pre-fee growth. Subtract your fund expense ratio and expected tax rate to estimate what you keep.
What is the difference between marginal and effective tax rate?
Your marginal rate applies to your last dollar of income. Your effective rate is the average rate you pay across all income, which is always lower.
What is a tax deduction versus a credit?
A deduction reduces taxable income, so it saves you your marginal rate on that amount. A credit reduces your tax bill directly, dollar for dollar.
What is taxable income?
It is your gross income minus adjustments and deductions that the tax code allows, such as the standard deduction or retirement contributions.