Roth IRA Calculator
Project your Roth IRA growth and tax-free retirement income.
The Roth IRA Calculator projects your tax-free retirement balance by retirement age and shows how much you can safely withdraw using the 4% rule. Use this to understand the power of tax-free growth and plan your retirement income strategy.
Examples
Starting at Age 25 with $7,000/Year
Late Start at Age 40 with Catch-Up Contributions
Frequently Asked Questions
What are the Roth IRA contribution limits?
Why is a Roth IRA beneficial?
When can I withdraw from a Roth IRA?
Quick Tips
- •Maximize your annual Roth contribution before age 59.5 whenever possible. The tax-free growth compounds powerfully over decades.
- •If you exceed income limits for direct Roth contributions, consider a "backdoor Roth" conversion (contribute to Traditional, then convert to Roth).
- •Roth contributions (not earnings) can be withdrawn penalty-free at any time, providing emergency liquidity.
- •At age 50, you can contribute an extra $1,000/year in catch-up contributions.
- •The 4% rule is conservative; in strong markets, you may safely withdraw more. In downturns, withdraw less to protect principal.
The Roth IRA Calculator projects your tax-free retirement balance by retirement age and shows how much you can safely withdraw using the 4% rule. Use this to understand the power of tax-free growth and plan your retirement income strategy.
How to Use This Calculator
Enter your current age, target retirement age, annual contribution amount, current Roth IRA balance, and expected return. The calculator projects your tax-free balance at retirement and estimates your safe monthly withdrawal amount using the 4% rule.
Understanding the Formula
Balance grows by: Balance(n+1) = Balance(n) x (1 + Return) + Annual Contribution. Tax-free withdrawal estimate uses the 4% safe withdrawal rate: Annual Withdrawal = Balance x 0.04.
Examples
Starting at Age 25 with $7,000/Year
You begin contributing the maximum $7,000 per year to a Roth IRA at age 25, earning an average 8% annual return. By age 65, your account would grow to approximately $1,864,000 — all tax-free in retirement. Using the 4% withdrawal rule, that provides about $74,560 per year in tax-free income.
Late Start at Age 40 with Catch-Up Contributions
You start contributing $7,000/year at age 40 and increase to $8,000/year at age 50 (catch-up contributions). With a 7% average annual return, your Roth IRA would reach approximately $525,000 by age 65, providing about $21,000/year in tax-free withdrawals.
Frequently Asked Questions
What are the Roth IRA contribution limits?
For 2024, the contribution limit is $7,000 per year ($8,000 if age 50 or older). Income limits apply: single filers with MAGI above $161,000 have reduced limits, and above $176,000 cannot contribute directly.
Why is a Roth IRA beneficial?
Roth IRA contributions are made with after-tax dollars, but all qualified withdrawals in retirement are completely tax-free. This includes all investment growth, making it especially powerful for long time horizons.
When can I withdraw from a Roth IRA?
Contributions can be withdrawn anytime without penalty. Earnings can be withdrawn tax-free after age 59 1/2 if the account has been open for at least 5 years. Roth IRAs have no required minimum distributions (RMDs).
Assumptions & Limitations
- Annual contribution limit is $7,000 (2024); limits increase with inflation and change annually.
- Income limits apply: single filers with MAGI above $161,000 have reduced limits; above $176,000 cannot contribute directly.
- Expected return is constant; actual market returns vary significantly year-to-year.
- No withdrawals or rollovers occur before retirement; actual needs may require accessing funds early.
- 4% withdrawal rule assumes a 30-year retirement; your actual lifespan and spending may differ.