35
years
$2,722,528
$245,000
$2,467,528
$2,178,023
$108,901
$9,075
272.23
x
35
years
$2,722,528
$245,000
$2,467,528
$2,178,023
$108,901
$9,075
272.23
x
The IRA Calculator projects the growth of your Individual Retirement Account based on your contributions, current balance, and expected investment returns. An IRA is a tax-advantaged account that allows individuals to save for retirement independently of employer-sponsored plans, making it one of the most flexible and accessible retirement savings vehicles available.
There are two primary types of IRAs: the Traditional IRA, where contributions may be tax-deductible and withdrawals in retirement are taxed as ordinary income, and the Roth IRA, where contributions are made with after-tax dollars but qualified withdrawals are completely tax-free. This calculator models the general growth dynamics applicable to both types, though the tax implications differ significantly between them.
The 2024 IRA contribution limit is $7,000 per year (or $8,000 for those aged 50 and over with the $1,000 catch-up contribution). While this limit is lower than the 401(k) limit, the IRA offers far more investment choices — you can invest in virtually any stock, bond, ETF, mutual fund, or even alternative assets, compared to the limited menu in most 401(k) plans. This investment flexibility often means lower fees and better performance potential.
The tax advantage of an IRA, whether traditional or Roth, dramatically enhances long-term returns. In a taxable account, annual dividends and capital gains distributions face taxes that create a drag on compounding. Inside an IRA, 100% of your returns compound without tax drag, allowing your money to grow faster. Over a 35-year horizon, tax-deferred compounding can add 20-30% more to your ending balance compared to an identical taxable investment.
This calculator assumes consistent annual contributions and returns to project your future balance. It separates your total into contributions and investment growth so you can see the power of compounding. Real-world results will vary based on market conditions, but the long-term historical average for a diversified portfolio provides a reasonable planning baseline.
The calculator uses the future value formula: FV = PV × (1+r)^n + PMT × [((1+r)^n − 1) / r], where PV is your current balance, PMT is your annual contribution, r is the annual return rate, and n is the number of years until retirement. Total contributions are simply annual contribution times years. Investment growth is the total balance minus your current balance minus total contributions.
Your investment growth should ideally be the largest component of your total balance, indicating that compound returns are doing the heavy lifting. If your projected balance seems low, consider whether you are contributing the maximum allowed, whether your expected return is realistic, and whether you can extend your working years to allow more compounding time.
Inputs
Results
Maxing out IRA at $7,000/year from age 30 builds over $1M.
Inputs
Results
Starting at 40 with $5,000/year and $50K balance yields nearly $600K.
The annual contribution limit is $7,000 for those under 50 and $8,000 for those 50 and older (includes $1,000 catch-up contribution). These limits apply to total contributions across all Traditional and Roth IRAs combined.
Traditional IRA contributions may be tax-deductible, with withdrawals taxed in retirement. Roth IRA contributions are after-tax, but qualified withdrawals are completely tax-free. The best choice depends on your current versus expected future tax rates.
Yes, you can contribute to both. However, if you or your spouse are covered by a workplace retirement plan, your Traditional IRA deduction may be limited based on your modified adjusted gross income (MAGI).
You can take penalty-free withdrawals from a Traditional IRA starting at age 59.5. Roth IRA contributions (not earnings) can be withdrawn anytime tax-free and penalty-free. Roth earnings require the account to be at least 5 years old and you to be 59.5+.
Starting at age 73 (under SECURE 2.0 Act), you must begin taking minimum withdrawals from Traditional IRAs each year based on IRS life expectancy tables. Roth IRAs have no RMDs during the owner's lifetime.
Yes. Self-employed individuals can open a Traditional or Roth IRA. Additionally, they may consider a SEP-IRA (up to 25% of net self-employment earnings, max $69,000 in 2024) or a Solo 401(k) for higher contribution limits.
IRAs can hold stocks, bonds, mutual funds, ETFs, CDs, and even certain alternative investments like real estate and precious metals. The main prohibited investments are life insurance and collectibles.
Contribute to your 401(k) at least up to the employer match first (free money). Then consider maxing your IRA for its broader investment choices and potentially lower fees. Then go back to increase 401(k) contributions.
Excess contributions are subject to a 6% penalty tax per year until corrected. You can fix this by withdrawing the excess plus any earnings before your tax filing deadline (including extensions).
Absolutely. Even $200/month ($2,400/year) invested at 7% for 30 years grows to about $227,000. The tax-advantaged compounding makes every dollar more efficient than a taxable account.
Roboculator Team
The Roboculator Team explains calculations, planning tools, and practical formulas in clear language for real-life situations.
How helpful was this calculator?
Be the first to rate!
