IRA Calculator

IRA Calculator

A Traditional IRA lets your investments grow tax-deferred until retirement, which can significantly boost your nest egg compared to a taxable account. This calculator projects your IRA balance at retirement based on your current age, existing balance, annual contributions, expected return, and anticipated tax rate in retirement. It also estimates your monthly income during a 25-year drawdown period.

How Traditional IRA Growth Is Calculated

Each year, the calculator compounds your balance plus annual contribution at the expected return rate: Balance = (Previous Balance + Annual Contribution) x (1 + return rate). This repeats for every year until your retirement age. The after-tax value applies your expected retirement tax rate: After-Tax = Balance x (1 - tax rate). Estimated monthly income assumes a 25-year drawdown: Monthly Income = After-Tax Value / (25 x 12).

Example

Key Factors That Affect Your IRA Growth

• Time until retirement — starting at 25 vs 35 can nearly double your final balance due to compounding
• Annual contribution — maxing out the $7,000 limit ($8,000 if 50+) each year makes a dramatic difference
• Rate of return — a 1% higher return over 35 years can increase your balance by 30% or more
• Tax rate in retirement — a lower retirement tax bracket increases the after-tax value of Traditional IRA withdrawals
• Starting balance — an existing balance benefits from decades of compounding, amplifying early contributions

Tips

1. Contribute the maximum allowed each year and set up automatic monthly transfers to stay on track
2. If you expect to be in a higher tax bracket in retirement, consider a Roth IRA instead where withdrawals are tax-free
3. A 7% expected return is reasonable for a diversified stock-heavy portfolio; use 5-6% for a more conservative mix
4. Take advantage of catch-up contributions ($1,000 extra) once you turn 50 to accelerate growth in your final working years