IRA Calculator

This calculator projects the growth of a traditional IRA and shows its after-tax value in retirement, compared to an equivalent Roth IRA.

• Annual Contribution: the 2024 limit is $7,000 (or $8,000 if you are 50 or older). This applies to all your IRAs combined.
• Traditional IRA deductibility: contributions may be tax-deductible depending on your income and whether you have a workplace retirement plan. In 2024, deductibility phases out for single filers with income between $77,000 and $87,000 if covered by a workplace plan.
• Tax Rate in Retirement: this is used to calculate the after-tax value of your traditional IRA. If you expect to be in the 22% bracket in retirement, enter 22. All withdrawals from a traditional IRA are taxed as ordinary income.
• Expected Annual Return: a diversified portfolio historically averages 7% annually. Adjust this based on your investment allocation and risk tolerance.

IRA growth uses compound interest, calculated monthly:

Balance = Previous Balance × (1 + r/12) + (Annual Contribution / 12)

After-tax value (Traditional IRA):

After-Tax Value = Balance × (1 - Tax Rate)

This simplification assumes you pay your retirement tax rate on the full withdrawal. In practice, withdrawals may be spread across multiple years and tax brackets.

Traditional vs Roth comparison: both accounts grow identically at the same return rate. The difference is when you pay taxes. With a traditional IRA, you save on taxes now but pay them on every dollar you withdraw. With a Roth IRA, you pay taxes now but withdraw everything tax-free. If your tax rate in retirement equals your current rate, they produce identical after-tax wealth.