How to use the Roth IRA calculator
- Enter your current age.
- Enter the age you plan to retire.
- Enter your current Roth IRA balance.
- Enter your annual contribution.
- Enter an expected annual return rate.
- Read your investment years, total contributions, growth and balance at retirement.
Worked example
You are 30, retire at 65, start with $5,000, contribute $6,000 a year at 7%. Over 35 years your total contributions reach $215,000 and your balance at retirement is roughly $1,030,000, with about $815,000 from investment growth.
The math
investment years = retirement age - current age
balance future value = current balance x (1 + rate)^years
contribution future value = annual contribution x ((1 + rate)^years - 1) / rate
balance at retirement = balance future value + contribution future value
The growth figure is the difference between your retirement balance and the total you actually contributed. Roth IRA withdrawals are tax-free in retirement, which is what makes this projection so powerful.