💎 Roth IRA Calculator
Calculate how much your Roth IRA will grow tax-free by retirement. See the advantage of tax-free withdrawals vs traditional IRAs.
Why Use This Calculator?
Tax-Free Growth and Withdrawals
Roth IRA contributions grow 100% tax-free and qualified withdrawals are tax-free in retirement. $7,000 annual contribution at 8% for 30 years grows to $850,000 - withdraw all tax-free vs traditional IRA paying 22-37% taxes ($187k-315k tax bill).
No Required Minimum Distributions
Unlike traditional IRAs requiring withdrawals at 73, Roth IRAs have no RMDs during your lifetime. Money grows indefinitely tax-free and passes to heirs tax-free. $500k Roth at age 85 = $0 forced withdrawals vs traditional IRA forcing $21k+ annually.
Income Limits and Backdoor Strategy
2024 income limits: $161,000 single/$240,000 married phaseout. High earners use backdoor Roth: contribute to traditional IRA (no income limit), immediately convert to Roth. Legal workaround to bypass income restrictions.
Early Withdrawal Flexibility
Withdraw contributions anytime tax-free and penalty-free (not earnings). Contributed $50k over 7 years? Withdraw full $50k anytime for emergencies. Better access than 401k but don't raid retirement savings unnecessarily.
Compound Growth Projection
Calculate growth with consistent contributions. $7,000/year for 30 years at 8% = $850,000 ($210k contributions, $640k growth). Starting 10 years earlier at age 25 vs 35 = $700k more at retirement due to compound growth.
Roth vs Traditional Comparison
Compare Roth (pay taxes now, withdraw tax-free) vs Traditional (deduct now, pay taxes later). In 12% bracket now, 24% bracket retirement = Roth saves $100k+ on $500k balance. In 32% now, 22% retirement = Traditional better.
Step-by-Step Guide
Check Income Eligibility
2024 limits - Single: full contribution under $146k, phaseout $146-161k, no contribution over $161k. Married: full under $230k, phaseout $230-240k, none over $240k. Use backdoor Roth if over limits.
Example:
Example: Single earning $150k = reduced contribution, $170k = $0 direct Roth, use backdoor
Determine Contribution Limit
2024: $7,000 under age 50, $8,000 age 50+ (catch-up). Must have earned income equal to contribution. Can't contribute more than you earned. Deadline: Tax Day (April 15) for prior year.
Example:
Example: Age 45 earning $60k = $7,000 max, Age 52 = $8,000 max, Earned $4k = max $4k
Enter Current Age and Retirement Age
Input current age and target retirement age to calculate growth period. More years = exponential compound growth. Age 25-65 (40 years) = 3× final balance vs age 35-65 (30 years) with same contributions.
Example:
Example: Age 30 retiring at 65 = 35 years growth, Age 45 to 65 = 20 years (much less growth)
Input Annual Contribution Amount
Enter how much you'll contribute yearly. Max $7,000/$8,000 recommended if affordable. Even $3,000-5,000 annually builds substantial wealth. Consistency matters more than maximizing - $5k for 30 years beats $7k for 15 years.
Example:
Example: $7,000 max, $500/month ($6,000/year), or $300/month ($3,600/year)
Set Expected Rate of Return
Conservative: 6%, Moderate: 8%, Aggressive: 10%. S&P 500 historical average ~10% but expect 7-8% realistically after inflation. Use 7-8% for balanced planning - don't overestimate to avoid disappointment.
Example:
Example: 100% stocks = 8-9%, 60/40 stocks/bonds = 7%, conservative = 6%
Include Current Roth IRA Balance
Enter existing Roth IRA balance if any. This amount grows alongside new contributions. $20k existing + $7k annual = calculator compounds both. Even small existing balance adds significantly over decades.
Example:
Example: $15,000 current balance grows to $168,000 in 30 years at 8% (zero contributions)
Calculate Total Value at Retirement
System calculates final balance including contributions and compound growth. Shows total contributions vs growth separately. $7k annual for 30 years = $210k contributed, grows to $850k = $640k pure growth.
Example:
Example: $850,000 total = $210,000 contributions + $640,000 tax-free growth
Compare Roth vs Traditional Tax Impact
Calculator shows tax difference. Roth: pay taxes on $7k contribution now ($1,540 at 22%), withdraw $850k tax-free. Traditional: save $1,540 now, pay $187k-315k taxes on $850k withdrawal (22-37% brackets).
Example:
Example: Roth saves $185k-313k over traditional if retiring in higher bracket
Plan Contribution Increases Over Time
Model annual contribution increases with raises. Starting at $5k, increasing 3% annually = $7k by year 8. Small increases compound dramatically - 3% raises add $200k+ to final balance over 30 years.
Example:
Example: $5,000 increasing to $7,000 over 10 years = $100k more at retirement
Consider Backdoor Roth if Over Income Limit
If exceeding income limits, use backdoor Roth: 1) Contribute $7k to traditional IRA (deductible), 2) Immediately convert to Roth, 3) Pay taxes on conversion (zero if immediate). Legal for high earners.
Example:
Example: Earn $200k, contribute traditional IRA non-deductible, convert to Roth immediately
Expert Tips & Strategies
Max Roth IRA Before Taxable Accounts
Always max Roth IRA ($7k/$8k) before investing in taxable brokerage accounts. Tax-free growth beats taxable growth by $200k-400k on $500k balance over 30 years. Only use taxable after maxing Roth + 401k ($30k total). Roth is gift to future you.
Young Workers: Choose Roth Over Traditional
If under 35 in 12-22% tax brackets, Roth beats traditional. You'll likely be in higher brackets later (peak earnings 45-60). Pay 12-22% taxes now vs 24-32% in retirement saves $150k-250k. Traditional better if currently in 32-37% brackets expecting lower retirement income.
Start Early for Compound Growth Magic
Starting age 25 vs 35 with same $7k annual = $700k difference at 65 (8% return). That decade is worth more than final 20 years combined due to compound growth. Even $3k/year from 25-35 beats $7k from 35-65. Time beats amount - start NOW.
Automate Contributions to Stay Consistent
Set up automatic monthly transfers ($583/month = $7k/year). Missing even 3 years of contributions in your 30s costs $250k+ at retirement. Automation ensures consistency through market ups/downs. "Set and forget" beats trying to time markets or remembering manual contributions.
Use Backdoor Roth for High Earners
Earn over $161k single/$240k married? Use backdoor Roth annually: contribute $7k non-deductible traditional IRA, immediately convert to Roth, pay zero taxes (no growth yet). 100% legal. Wealthy individuals use this to accumulate $500k-1M+ tax-free Roth balances.
Don't Withdraw for Non-Retirement Needs
Yes, you CAN withdraw contributions anytime, but DON'T unless true emergency. Each $10k withdrawn costs $94k in lost growth over 30 years (8% return). Maintain 3-6 month emergency fund separately. Roth is retirement wealth builder, not emergency fund.
Contribute by April 15 for Prior Year
Have until Tax Day (April 15, 2025) to contribute for 2024. If didn't max 2024 ($7k), contribute by April 15, then start 2025 contributions. Catching up prior year before deadline adds $80k-120k to retirement (30-year growth on $7k).
Rebalance and Invest Aggressively When Young
Under 40? Go 90-100% stocks in Roth for maximum growth. You have 25-40 years to recover from downturns. 100% stocks (10% return) = $1.15M vs 60/40 stocks/bonds (7% return) = $566k on $7k annual over 35 years. Bonds after 50, stocks when young.
Common Mistakes to Avoid
✓ Better approach: Earned only $4,000 but contributing $7,000 violates IRS rules. Contribution limit is lesser of $7,000 or earned income. Excess contributions taxed 6% annually until withdrawn. If earned $4k, max contribution is $4k. Investment/passive income doesn't count - must be W-2 or self-employment income.
✓ Better approach: Single earning $170k contributing directly to Roth = prohibited contribution, 6% penalty annually. Must use backdoor Roth instead: contribute to traditional IRA (non-deductible), convert to Roth immediately. Or reduce MAGI below $161k by maxing 401k/HSA. Don't ignore income limits - IRS catches this.
✓ Better approach: Withdrawing $20k earnings at age 45 = 10% penalty ($2k) + income tax ($4,400 at 22%) = $6,400 cost. Contributions can be withdrawn anytime, but earnings need 5-year rule + age 59½. Early withdrawal destroys tax-free benefit and costs $150k+ in lost growth.
✓ Better approach: Contributing $7k annually but leaving it in money market earning 0.5% instead of investing in stocks/funds. $7k/year cash = $230k in 30 years vs invested at 8% = $850k. That's $620k lost by not investing. Roth IRA is account type, not investment - must buy stocks/ETFs/funds inside it.
✓ Better approach: Earning $45k (12% bracket) choosing traditional IRA saves $840 now but costs $120k-220k in retirement taxes (24-37% brackets likely). Young workers in 10-12% brackets should always choose Roth - pay low taxes now, save fortune later. Traditional only makes sense in 24%+ brackets.
✓ Better approach: Market down 20%, stopping $7k contribution means missing discount. $7k invested at bottom grows 40-100% in recovery = $2,800-7,000 extra vs stopping. Best returns come from consistent contributions through crashes. Time in market beats timing market - never stop contributions.
✓ Better approach: Thinking "only $2,000/year isn't worth it" at age 25. That $2k annually for 40 years = $620k at 8% return. Waiting until affording $7k at 35 grows to only $850k in 30 years. Starting small early beats starting big late - $2k from 25-65 beats $7k from 35-65.
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Frequently Asked Questions
What is a Roth IRA?
A Roth IRA is a retirement account where you contribute after-tax money, but all withdrawals in retirement are tax-free. Unlike traditional IRAs, you pay taxes now but never pay taxes on growth or withdrawals. Its ideal for people who expect to be in a higher tax bracket in retirement.
How much can I contribute to a Roth IRA?
$6,500/year if under 50, $7,500/year if 50+ (2024 limits). However, income limits apply: phase-out starts at $138,000 (single) or $218,000 (married). High earners can use the "backdoor Roth IRA" strategy to contribute indirectly.
Roth IRA vs Traditional IRA?
Traditional IRA: Tax deduction now, pay taxes on withdrawals later. Roth IRA: No deduction now, tax-free withdrawals later. Choose Roth if you expect higher future tax rates, are young with time for growth, or want tax-free retirement income.
When can I withdraw from a Roth IRA?
You can withdraw contributions (not earnings) anytime tax-free and penalty-free. For earnings, wait until 59½ and account is 5+ years old to avoid taxes and penalties. Exceptions exist for first home ($10k), education, and certain hardships.
Should I max out my Roth IRA?
Yes, if possible! Prioritize: (1) 401(k) match, (2) Max Roth IRA ($6,500), (3) Max 401(k) ($23,000), (4) Taxable brokerage. Roth IRAs have more investment options than 401(k)s and offer tax-free growth - one of the best retirement vehicles available.
Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.