How to Use Our Roth IRA Calculator

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How to Use Our Roth IRA Calculator

A Roth IRA is one of the most powerful retirement accounts available. Our Roth IRA Calculator shows you how tax-free growth can dramatically increase your retirement wealth.

What to Enter

• Current Age -- Your age today.
• Retirement Age -- When you plan to start withdrawals.
• Current Roth IRA Balance -- What you already have in your Roth IRA.
• Annual Contribution -- How much you plan to contribute each year. The 2024 limit is $7,000 (or $8,000 if you are 50 or older).
• Expected Return -- Your anticipated annual investment return.
• Tax Rate -- Your current and expected future tax rates (used for Roth vs Traditional comparison).

The Roth Advantage

The calculator highlights the key benefit of a Roth IRA: tax-free withdrawals in retirement. Every dollar in your Roth -- including all investment gains -- comes out completely tax-free after age 59.5 (assuming the account has been open for at least 5 years).

Compare this to a Traditional IRA, where withdrawals are taxed as ordinary income. If your $500,000 Traditional IRA is in the 22% bracket, you effectively have $390,000 in spending power. A $500,000 Roth IRA gives you the full $500,000.

When a Roth Makes Sense

A Roth IRA is generally better when:

• You expect to be in a higher tax bracket in retirement
• You are early in your career and in a low tax bracket now
• You want tax diversification alongside a Traditional 401(k)
• You value the flexibility of no required minimum distributions

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