Roth Ira Calculator

The Roth IRA Calculator projects what a Roth IRA could grow to from a starting balance plus yearly contributions, then translates the result into the figures that make a Roth a Roth: how much of the final balance is tax-free earnings, how much tax those earnings would otherwise have cost at your expected retirement tax rate, and what the balance could pay you each month under the 4% rule — tax-free.

How It Works

The projection compounds a starting balance and a stream of equal annual contributions at a constant assumed return:

$\text{Future Value} = P(1+r)^t + C \times \frac{(1+r)^t - 1}{r}$

where $P$ is the initial balance, $C$ the annual contribution, $r$ the annual return, and $t$ the years. Total contributions are the initial balance plus $C \times t$; earnings are whatever growth added on top; and the tax saved applies your retirement tax rate (22% by default) to those earnings — the amount a taxable account or a traditional IRA withdrawal would have surrendered. If you enter current and retirement ages, the year count is taken from them automatically. A year-by-year schedule shows the balance, cumulative contributions, and earnings for every year.

Worked Example

Start with $10,000**, contribute **$6,000 a year for 20 years at 7%:

• Growth on the initial balance: $10,000 × 1.07²⁰ = **$38,696.84**
• Growth on the contributions: $6,000 × ((1.07²⁰ − 1) ÷ 0.07) = **$245,972.95**
• Future value: $284,669.80**, made of **$130,000 of contributions and $154,669.80 of earnings
• Tax saved at 22%: $34,027.36 — the earnings arrive in retirement completely untaxed
• 4% withdrawal: $11,386.79 a year, or$948.90 a month, also tax-free

More than half the final balance is earnings, and not a cent of tax is due on them if the withdrawals are qualified. That is the entire Roth proposition in one line: pay tax on the seed, never on the harvest.

The Rules Behind the Numbers

For reference, the IRS contribution limits stored with this calculator are $7,000 a year under age 50 and$8,000 at 50-plus — note the calculator deliberately does not cap your inputs, so projections can model catch-up changes, spousal contributions, or simply what an amount would grow to. Qualified withdrawals — account open at least five years and age 59½ or older — take contributions and earnings out tax-free; your own contributions (not earnings) can in fact be withdrawn at any time without tax or penalty, though doing so spends the compounding the example above is celebrating. Eligibility to contribute phases out at higher incomes, which the projection also does not police.

Limitations

Returns are assumed constant every year; real markets deliver the same average in a lumpy order that changes outcomes, especially near retirement. Figures are nominal — $284,669.80 in twenty years buys less than it does today — and no fees, fund expenses, or state-specific rules are modeled. The "tax saved" is a comparison against being taxed on the earnings at your stated retirement rate, not a promise about future tax law, which can and does change.

Frequently Asked Questions

Why does the default tax rate matter if Roth withdrawals are tax-free?

Because "tax saved" is a comparison figure: it values the Roth's tax exemption by pricing the tax you would have paid on the same earnings in a taxable or traditional arrangement, at the retirement rate you supply (22% if you leave it blank). Set it to your expected retirement bracket for a realistic valuation.

What if I enter ages instead of years?

When both a current age and a retirement age are provided, the calculator uses the difference as the projection period, overriding the years field. The yearly schedule then shows your age in each row, which makes it easy to see the balance at specific milestones.

Can I contribute more than the IRS limit in the calculator?

Yes — the inputs are not capped, deliberately. Projections are often used to test catch-up contributions, combined household contributions, or hypothetical scenarios. Staying within the legal limit for your actual account remains your responsibility; the stored limits ($7,000 /$8,000) are shown so you can check.