Roth IRA Calculator
Project your tax-free retirement savings growth and compare Roth vs Traditional IRA outcomes
Roth IRA Settings
Used to compare Roth vs Traditional tax impact
Projection Results
Roth IRA Balance at Retirement (Tax-Free)
$1,005,305.52
Total Contributions
$237.50K
Tax-Free Earnings
$767.81K
Investment Period
35 years
Growth Multiple
4.23x
Roth vs Traditional Comparison
Growth Schedule (Every 5 Years)
| Age | Contributed | Balance | Earnings |
|---|---|---|---|
| 35 | $42.50K | $51.41K | $8.91K |
| 40 | $75.00K | $109.48K | $34.48K |
| 45 | $107.50K | $190.93K | $83.43K |
| 50 | $140.00K | $305.17K | $165.17K |
| 55 | $172.50K | $465.39K | $292.89K |
| 60 | $205.00K | $690.12K | $485.12K |
| 65 | $237.50K | $1.01M | $767.81K |
Complete Guide to Roth IRA Planning
What is a Roth IRA?
A Roth IRA (Individual Retirement Account) is a tax-advantaged retirement savings vehicle where contributions are made with after-tax income. In exchange for paying taxes upfront, all qualified withdrawals in retirement — including decades of investment gains — are completely tax-free.
This makes the Roth IRA one of the most powerful long-term wealth building tools available, especially for younger investors who expect their tax rate to be higher in retirement. Use our Compound Interest Calculator to see how tax-free compounding accelerates growth compared to taxable accounts.
Roth IRA Growth Formula
Future Value of Roth IRA:
FV = Balance × (1 + r)ⁿ + Contribution × [(1 + r)ⁿ − 1] / r
Where: Balance = current account value, r = annual return rate, n = years to retirement, Contribution = annual amount added
The first term compounds your existing balance; the second term is the future value of an annuity (your annual contributions). Both grow completely tax-free in a Roth IRA.
Benefits of a Roth IRA
Tax-Free Growth
All investment gains compound without annual tax drag, and qualified withdrawals are 100% tax-free — unlike Traditional IRAs where withdrawals are taxed as income.
No Required Distributions
Unlike Traditional IRAs that force distributions at age 73, Roth IRAs have no RMDs during the owner's lifetime — letting funds grow indefinitely for heirs.
Flexible Withdrawals
Contributions (not earnings) can be withdrawn at any time without penalty or tax, providing an emergency fund backstop that Traditional IRAs lack.
Estate Planning
Inherited Roth IRAs pass tax-free to beneficiaries. Combined with no RMDs, this makes Roth accounts ideal for multi-generational wealth transfer strategies.
Tips for Maximizing Your Roth IRA
Start Early: Contributing $6,500/year from age 25 vs 35 can mean $400K+ more at retirement due to compound growth. Use our Retirement Savings Calculator to model different start ages.
Max Out Annually: Unused contribution room cannot be carried forward. Contribute the full $7,000 (or $8,000 if 50+) each year even if it means reducing taxable brokerage contributions.
Backdoor Roth: If your income exceeds the phase-out limits, contribute to a Traditional IRA then convert to Roth. Check our FIRE Calculator to see how Roth optimization fits into early retirement planning.
Common Roth IRA Mistakes
Withdrawing Earnings Early
Withdrawing earnings before age 59½ triggers a 10% penalty plus income tax, destroying years of tax-free compounding. Only contributions can be withdrawn penalty-free at any time.
Exceeding Income Limits
Contributing directly when your MAGI exceeds the phase-out range triggers a 6% excess contribution penalty per year until corrected. Use the backdoor Roth conversion method instead.
Choosing Roth When Traditional is Better
If you are in a high tax bracket now but expect a much lower rate in retirement (e.g. near peak earnings), a Traditional IRA's upfront deduction may provide more lifetime value than Roth's tax-free withdrawals.
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OpenFrequently Asked Questions
What is a Roth IRA and how does it work?
A Roth IRA is a retirement account funded with after-tax dollars. Contributions grow tax-free and qualified withdrawals after age 59½ are completely tax-free. Unlike Traditional IRAs, there are no required minimum distributions (RMDs) during the owner's lifetime, making it an excellent wealth-transfer vehicle.
How is the future value of a Roth IRA calculated?
The formula is FV = Balance × (1 + r)ⁿ + Contribution × [(1 + r)ⁿ − 1] / r, where r is the annual return rate and n is the number of years until retirement. The first term grows your existing balance; the second compounds your annual contributions over time.
What is the difference between a Roth IRA and a Traditional IRA?
With a Traditional IRA, contributions may be tax-deductible now but withdrawals are taxed as ordinary income in retirement. A Roth IRA uses after-tax contributions but all qualified withdrawals are tax-free. The Roth wins when your retirement tax rate is higher than your current rate; the Traditional wins when your current rate is higher.
What are the Roth IRA contribution limits?
For 2024-2025, the annual contribution limit is $7,000 ($8,000 if age 50+). Income phase-outs apply: for single filers, the ability to contribute phases out between $146,000-$161,000 MAGI (2024). These limits are adjusted annually for inflation.
What common mistakes do people make with Roth IRAs?
Three key mistakes: (1) Not contributing early enough — missing years of tax-free compounding cannot be recovered. (2) Withdrawing earnings before 59½, triggering a 10% penalty plus income tax. (3) Exceeding income limits without using a backdoor Roth conversion strategy.
Can you show a worked example of Roth IRA growth?
Starting at age 30 with $10,000, contributing $6,500/year at 7% annual return until age 65: FV = $10,000 × (1.07)³⁵ + $6,500 × [(1.07)³⁵ − 1] / 0.07 = $106,765 + $898,358 = $1,005,123. Total contributions = $10,000 + $6,500 × 35 = $237,500. Tax-free earnings = $767,623.