An individual retirement account (IRA) is an investment account that can help you build your retirement savings. A Roth IRA allows your money to grow tax-free, which can be extremely beneficial for retirement savings and future income taxes, if you maximize contributions each year.
Use the Roth IRA calculator below to understand your potential earnings — and tax savings — from contributing to this type of account.
When you change any value in the following form fields, newly calculated values are immediately provided for the output values. Click the view report button to see all of your results.
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Definitions
Starting balance
The current balance of your Roth IRA.
Annual contribution
The amount you will contribute to your Roth IRA each year. This calculator assumes that you make your contribution at the beginning of each year. For 2022 the maximum annual IRA contribution of $6,000 is an unchanged from 2021. It is important to note that this is the maximum total contributed to all of your IRA accounts. The contribution limit increases with inflation in $500 increments. An annual change to the contribution limit only occurs if the cumulative effect of inflation since the last adjustment is $500 or more.
If you are 50 or older you can make an additional 'catch-up' contribution of $1,000. The 'catch-up' contribution amount of $1,000 remains unchanged for 2022. In order to qualify for the 'catch-up' contribution, you must turn 50 by the end of the year in which you are making the contribution.
Roth IRA contributions are limited for higher incomes. If your income falls in a 'phase-out' range you are allowed only a prorated Roth IRA contribution. If your income exceeds the phase-out range, you do not qualify for any Roth IRA contribution. The table 'Roth IRA 2022 Contribution Phaseout' summarizes the income 'phase-out' ranges for Roth IRAs.
| Tax Filing Status | Income Phase-Out Range |
|---|---|
| Married filing jointly or head of household | $204,000 to $214,000 |
| Single | $129,000 - $144,000 |
| Married filing separately | $0 - $10,000 |
For the purposes of this calculator, we assume that your income does not limit your ability to contribute to a Roth IRA.
Starting in 2010 high income individuals have the option to make non-deductible traditional IRA contributions and then immediately convert them to a Roth IRA. This can effectively eliminate the income phase-out for Roth IRA contributions.
Current age
Your current age.
Age at retirement
Age at which you plan to retire. This calculator assumes that the year you retire, you do not make any contributions to your IRA. For example, if you retire at age 65, your last contribution occurs when you are actually age 64.
Expected rate of return
The annual rate of return for your IRA. This calculator assumes that your return is compounded annually and your contributions are made at the beginning of each year. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2021, had an annual compounded rate of return of 13.6%, including reinvestment of dividends. From January 1, 1970 to December 31st 2021, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 11.3% (source: www.spglobal.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.
Marginal tax rate
The marginal tax rate you expect to pay on your taxable investments. Use the ‘Filing Status and Federal Income Tax Rates’ table to assist you in estimating your federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| *Caution: Do not use these tax rate schedules to figure 2021 taxes. Use only to figure 2022 estimates. Source: Rev. Proc. 2021-45 | ||||
| 10% | $0 - $20,550 | $0 - $10,275 | $0 - $14,650 | $0 - $10,275 |
| 12% | $20,550 - $83,550 | $10,275 - $41,775 | $14,650 - $55,900 | $10,275 - $41,775 |
| 22% | $83,550 - $178,150 | $41,775 - $89,075 | $55,900 - $89,050 | $41,775 - $89,075 |
| 24% | $178,150 - $340,100 | $89,075 - $170,050 | $89,050 - $170,050 | $89,075 - $170,050 |
| 32% | $340,100 - $431,900 | $170,050 - $215,950 | $170,050 - $215,950 | $170,050 - $215,950 |
| 35% | $431,900 - $647,850 | $215,950 - $539,900 | $215,950 - $539,900 | $215,950 - $323,925 |
| 37% | Over $647,850 | Over $539,900 | Over $539,900 | Over $323,925 |
Total contributions
The total amount contributed to this IRA.
Maximize contributions
Check this box to contribute the maximum allowed to your account each year. This includes the additional catch-up contribution available when you are age 50 or over.
Total taxable savings
The total amount you would have accumulated by retirement in a taxable savings account.
Roth total at retirement
Total value in your Roth IRA at your retirement. To take any distributions that include earnings that are tax free, the Roth IRA must be opened for 5 tax years. Eligible tax-free distributions include those taken for death or disability, after age 59-1/2, or for a first-time home purchase.
Is An Annuity Right For You?
Average Rate of Return on a Roth IRA
A Roth IRA is not an investment in and of itself. Rather, it’s an account in which you house your investments. With this in mind, it’s important to note that your Roth IRA does not actually generate investment returns. The investments inside of a Roth IRA generate investment returns.
Historically, you could expect a 7% to 10% rate of return on individual stocks and stock-based mutual funds. However, according to Business Insider, the S&P 500 average yearly return has increased to about 14.7% in the past 10 years.
While 14.7% may be the long-term average, returns can vary from year to year. For conservative results, utilize an annual return projection closer to 10%. If you intend to invest your Roth IRA contributions in other instruments, such as bonds or certificates of deposit (CDs), you’ll want to use an even lower return estimate.
Keeping a Healthy Money Mindset When Saving for Retirement
Saving for retirement can be stressful, overwhelming and a little scary if you don’t have help along the way. Talking with a financial advisor can help you overcome these negative feelings, and learning how to view money differently can help you thrive before and after you retire – regardless of your circumstances.
No matter what types of assets in which you invest, don’t let a negative mindset dictate how much you set aside each month. Instead, make a retirement plan that will help you achieve your desired lifestyle and reduce some of the savings’ stress, particularly, during significant life changes.
Planning for Retirement With a Financial Advisor
Understanding the benefits of different retirement accounts can help you determine which is the best option for you. While this Roth IRA calculator illustrates potential savings growth and tax benefits, it does not replace professional guidance. You should consult with a financial advisor when making decisions that can impact your money and your future.
Roth IRA income limits can be circumvented by taking advantage of a tax code loophole known as the “backdoor Roth IRA.” It entails funding a traditional IRA with after-tax dollars and, subsequently, converting the contribution into a Roth IRA. That said, not everyone can pursue this loophole; complicated limitations exist.
Experts in the financial field can guide you through the process of choosing an investment account. They can also help you determine the best way to withdraw your funds in retirement — be it through purchasing an annuity, withdrawing certain percentages each month or through another method.
Learn About How Annuities Can Bolster Your Retirement Strategy
Frequently Asked Questions About Calculating a Roth IRA
According to the IRS, the 2024 contribution limit is $7,000. If you’re 50 or older, the maximum contribution is $8,000. This is an aggregate limit that applies to all IRAs you own.
To ensure a comfortable retirement, the conservative approach is to maximize your contributions each year. However, the exact amount each individual should contribute depends on his or her financial situation and desired retirement lifestyle.
Yes. It is possible to lose money in a Roth IRA. Most losses are dependent on market fluctuations; however, you can also lose money from incurring early withdrawal penalties.
There are several different five-year rules. The most common refers to the five-year waiting period required to make penalty-free withdrawals from your Roth IRA.
Unlike contributions to a traditional IRA, the IRS has stated you don’t need to report Roth IRA contributions on tax returns.
Married couples, like single filers, can have multiple IRAs. However, joint accounts aren’t permitted. Each spouse can contribute to his or her own account or one spouse can make all the contributions to the accounts. However, the aggregate annual contribution limits noted above are applicable.
Editor Malori Malone contributed to this article.
