IRA Calculator

IRA Calculator

A Traditional IRA is one of the most effective retirement savings tools available to U.S. workers -- contributions may reduce your taxable income today, and all growth inside the account is tax-deferred until you withdraw in retirement. That deferral alone, compounded over 25--35 years, can add hundreds of thousands of dollars to your final balance compared to investing in a taxable brokerage account. This calculator projects your IRA balance at retirement, estimates the after-tax value based on your expected retirement tax rate, and shows a monthly income figure assuming a 25-year drawdown period.

How Traditional IRA Growth Is Calculated

The projection compounds your balance year-by-year:

Year-End Balance = (Prior Balance + Annual Contribution) x (1 + Annual Return Rate)

This repeats for every year from your current age to retirement age. The after-tax calculation then applies your expected retirement tax bracket:

After-Tax Value = Balance at Retirement x (1 - Retirement Tax Rate)

Estimated monthly income divides the after-tax value across a 25-year retirement:

Monthly Income = After-Tax Value / (25 x 12)

Worked Examples

Scenario 1 -- Age 25, starting from zero, maxing contributions Starting balance: $0. Annual contribution: $7,000. Return: 7%. Years: 40. Retirement tax rate: 22%. Balance at 65: $1,480,000. After-tax value: $1,154,400. Monthly income: $3,848. The 40-year runway with consistent maxing out is the most powerful scenario -- $280,000 in total contributions grows to $1.48M.

Scenario 2 -- Age 35, existing balance, contributing less than the maximum Starting balance: $18,000. Annual contribution: $4,500. Return: 6.5%. Years: 30. Retirement tax rate: 24%. Balance at 65: $573,200. After-tax value: $435,600. Monthly income: $1,452. This represents a realistic mid-career scenario where contributions are limited but there is still a meaningful base to build on.

Scenario 3 -- Age 52, catch-up contributions, 13 years to retirement Starting balance: $140,000. Annual contribution: $8,000 (includes $1,000 catch-up). Return: 6%. Years: 13. Retirement tax rate: 22%. Balance at 65: $380,100. After-tax value: $296,500. Monthly income: $988. Late starters can still build a meaningful supplement to Social Security and a 401k through consistent catch-up contributions.

IRA Projection Reference Table (7% Return, 22% Retirement Tax Rate)

When to Use This Calculator

• When deciding how much to contribute to your IRA this year versus other savings priorities
• To compare the Traditional IRA path versus a Roth IRA (which uses after-tax contributions but produces tax-free withdrawals)
• When setting an annual contribution target and wanting to see the long-run impact of the full $7,000 limit versus a reduced amount
• To understand how much of your projected retirement income the IRA alone will provide, before factoring in Social Security and 401k balances
• At age 49 when approaching the catch-up contribution eligibility threshold at 50

Common Mistakes

1. Confusing deductibility with contribution eligibility -- you can always contribute to a Traditional IRA if you have earned income under the annual limit ($7,000 in 2025--2026). Whether that contribution is tax-deductible is a separate question based on your income and workplace plan coverage. Even a non-deductible IRA contribution grows tax-deferred, which is still valuable. Many people skip the IRA entirely when they assume they cannot deduct -- that is leaving tax-deferred growth on the table.
2. Using a single return rate assumption without stress-testing -- a 7% return is reasonable for a 70/30 stock-bond portfolio historically, but running the calculator at 5% and 9% shows the range of outcomes. A $7,000/year contribution at 5% over 30 years produces $481,000 versus $864,000 at 9% -- a $383,000 spread from a 4-point rate difference. Do not plan retirement around just one assumption.
3. Ignoring required minimum distributions (RMDs) -- Traditional IRA balances must be drawn down starting at age 73 (rising to 75 in 2033). On a $1,000,000 balance at 73, the first-year RMD is approximately $37,700, which is taxable income. Large Traditional IRA balances can push retirees into higher brackets than expected. Roth conversions in the years before RMDs begin (the "Roth conversion ladder" window) can reduce this burden.
4. Not updating contribution amounts after IRS limit increases -- IRA limits are indexed to inflation and have risen from $5,500 in 2018 to $7,000 in 2024. Investors who set up automatic $5,500/year contributions and never updated them have been leaving $1,500/year in potential contributions unused.

Current Context for 2026

The IRA contribution limit held at $7,000 in 2025 and is expected to remain there for 2026 pending IRS inflation adjustment announcements. The catch-up limit for those 50+ remains at $8,000. The income phase-out range for deducting Traditional IRA contributions for single filers with a workplace plan is approximately $79,000--$89,000 for 2026 (up slightly from 2024's $77,000--$87,000 range). Stock market performance in 2024--2025 was strong, which means existing IRA balances look healthy heading into 2026 -- but this also makes it more important to stress-test projections at lower return rates. The current high-rate environment makes holding cash inside an IRA in money market funds (earning 4--5%) a meaningful option for the conservative portion of a portfolio.

Tips

1. Contribute to the IRA early in the calendar year rather than waiting until the April filing deadline -- a January contribution has 12 extra months of compounding versus an April contribution
2. If cash flow is tight, set up a monthly automatic contribution of $583/month ($7,000 / 12) rather than trying to find a lump sum at year end
3. Choose low-cost index funds inside your IRA -- paying 1.0% in fund expense ratios versus 0.05% costs roughly $85,000 on a $500,000 account over 20 years at 7% gross growth
4. Keep track of non-deductible contributions in IRS Form 8606 to avoid paying tax twice on the same money when you withdraw
5. At ages 59.5 and older, compare annual withdrawals against your standard deduction -- a married couple over 65 can withdraw approximately $32,000/year from a Traditional IRA completely tax-free within the 0% bracket
6. If you expect your retirement tax rate to exceed your current rate, shift new contributions to a Roth IRA instead; use this calculator to run both scenarios side by side

Related Calculations

• Roth IRA Calculator -- compare after-tax contributions with tax-free withdrawals against the Traditional IRA's upfront deduction
• 401(k) Calculator -- model your employer-sponsored plan alongside your IRA for a complete retirement projection
• Compound Interest Calculator -- isolate the effect of compounding on a lump sum or series of contributions
• Retirement Calculator -- combine IRA, 401k, and Social Security into a full retirement income picture