Roth IRA Growth Calculator

How to calculate Roth IRA calculator?

The projection combines your current balance, regular annual contributions, and an assumed annual rate of return to estimate the tax-free value at retirement.

Key formula: FV = PV*(1+r)^n + C*(((1+r)^n - 1)/r) where PV = current balance, C = annual contribution, r = annual rate (decimal), n = years invested.

Using the Roth IRA calculator calculator: an example

Example inputs: age 30, retirement age 65, current balance $10,000, annual contribution $5,000, expected return 7%.

Step-by-step calculation:

1. Calculate years invested: n = 65 - 30 = 35 years.
2. Convert rate to decimal: r = 7% = 0.07.
3. Grow current balance: PV*(1+r)^n → 10,000*(1.07)^35.
4. Future value of contributions: C*(((1+r)^n - 1)/r) → 5,000*(((1.07)^35 - 1)/0.07). Add both parts to get FV.

Frequently Asked Questions

Can I use monthly contributions instead of annual?

This calculator assumes annual contributions. For monthly contributions, convert to an equivalent annual total or use a tool that supports monthly compounding.

Are taxes included in the projection?

Roth IRA qualified withdrawals are tax-free, so the projection shows the tax-free account balance and does not model taxes on withdrawals.

What if I increase contributions over time?

The basic model uses fixed annual contributions. To model increasing contributions, run multiple scenarios or use a compound model that accepts variable annual amounts.

How should I choose the rate of return?

The rate is an assumption based on historical averages and your risk tolerance. Run scenarios with conservative, moderate, and optimistic rates to understand the range of outcomes.