Roth IRA Calculator

Roth IRA Calculator

This calculator projects the growth of your Roth IRA over time, showing your total balance at retirement, tax-free growth, estimated tax savings compared to a taxable account, and sustainable monthly income during a 25-year drawdown. Because Roth IRA withdrawals are tax-free in retirement, the growth shown is exactly what you keep.

How Roth IRA Growth Is Calculated

The calculator compounds annual contributions at your expected return rate each year:

• Balance = (Previous Balance + Annual Contribution) x (1 + Return Rate), repeated for each year
• Tax-Free Growth = Final Balance - Total Contributions
• Est. Tax Savings = Tax-Free Growth x 22% (assumed marginal tax rate)
• Monthly Income = Final Balance / (25 years x 12 months)

The 2024 annual contribution limit is $7,000 ($8,000 if age 50 or older).

Example

Key Factors That Affect Roth IRA Growth

• Contribution consistency — contributing the full annual limit every year is the single most impactful factor
• Time in market — starting at 25 versus 35 nearly doubles the final balance at the same contribution level
• Expected return — stock-heavy allocations average 7-10% historically; a bond-tilted portfolio yields less
• Contribution limits — exceeding the annual limit incurs a 6% penalty on the excess each year
• Income limits — single filers earning above $161,000 (2024) may need to use a backdoor Roth strategy

Tips

1. Max out your Roth IRA contribution every year; even a single missed year at $7,000 costs tens of thousands in future growth
2. If your income exceeds the direct contribution limit, ask your advisor about a backdoor Roth conversion
3. Invest Roth IRA funds in growth-oriented assets since the gains will never be taxed
4. Do not withdraw contributions early unless absolutely necessary; the real power of a Roth IRA is decades of tax-free compounding