Finance
Roth IRA Calculator
A Roth IRA grows by FV = PV·(1+r)^n + PMT·((1+r)^n − 1) ÷ r, and comes out tax-free. Enter your age, balance and yearly contribution to project the tax-free balance at retirement — and see the tax you would owe on the same growth in a taxable account.
Your Roth IRA
How old you are now
yrs
When you plan to withdraw
yrs
What is already in the Roth IRA
$
Yearly deposit — the IRS limit is about $7,000 ($8,000 over 50)
$
Long-run average — a diversified portfolio is often modelled at 6–8%
%
The rate a taxable account would pay on the growth
%
Tax-free at age 65
$1,165,677
35 years · 7.0% return · withdrawn tax-free
Contributions $255,000Tax-free growth $910,677
Total contributed
$255,000
Tax-free growth
$910,677
You added
$245,000
Started with
$10,000
The Roth advantage
In a taxable account, the $910,677 of growth would be taxed — about $136,602 at 15%. In a Roth, that stays in your pocket.
Estimate only. Returns vary and are not guaranteed. Roth withdrawals are tax-free if the account is 5+ years old and you are 59½ or older; contribution and income limits apply.
Try a scenario
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The basics
What is a Roth IRA?
A Roth IRA is a retirement account with a tax deal that runs opposite to most: you pay tax now, then never again on the growth. Two ideas explain it.
after-tax in, tax-free out
The tax trade
Contributions are made with money you have already paid tax on, so they do not cut your bill today. In exchange, qualified withdrawals in retirement — growth included — are entirely tax-free.
$910,677 of growth in the example is never taxed
the wrapper, not the investment
You choose what is inside
A Roth IRA holds investments — funds, stocks, bonds — and their return drives the balance. The account decides the tax treatment; what you put in it decides the growth.
Modelled here at 7% a year
Method
How the projection works
Four steps from your age today to a tax-free balance at retirement.
- 1
Set the years and the monthly amount
Subtract your age from your retirement age, times twelve for the months n. Divide the annual contribution by twelve.
(65 − 30) × 12 = 420 mo · $7,000/yr = $583/mo - 2
Turn the return into a monthly rate
Divide the expected annual return by twelve for the periodic rate r.
7% ÷ 12 = 0.5833% - 3
Grow the balance and contributions
The current balance and every contribution compound to retirement, all tax-free inside the Roth.
FV = PV·(1+r)^n + PMT·((1+r)^n − 1) ÷ r = $1,165,677 - 4
See the tax you skip
Multiply the growth by the rate a taxable account would pay to see the Roth advantage.
$910,677 × 15% = $136,602 untaxed
Worked examples
The cost of starting late
$7,000 a year at 7%, from a $10,000 start, to age 65. The start age is the only variable — and it dominates.
| Start age | You contribute | Tax-free growth | Balance at 65 |
|---|---|---|---|
| 25 | $290,000 | $1,404,255 | $1,694,255 |
| 30 | $255,000 | $910,677 | $1,165,677 |
| 35 | $220,000 | $572,815 | $792,815 |
| 45 | $150,000 | $194,261 | $344,261 |
Where it shows up
When a Roth shines
Three situations where the Roth deal is especially strong.
early career
Low bracket now
When your income — and tax rate — is lower than it will be in retirement, paying tax on contributions now is a bargain. Young savers benefit most.
Pay tax cheaply today, skip it later
long runway
Decades to compound
The longer the money grows, the larger the tax-free gain. A Roth started young turns a modest contribution into a large untaxed balance.
More years = more untaxed growth
flexible access
Contributions stay reachable
Because you already paid tax on contributions, you can withdraw them without tax or penalty — a built-in backstop other retirement accounts lack.
Withdraw what you put in, any time
Reference
Roth vs traditional at a glance
General guidance, not tax advice. The right choice hinges on your tax rate now versus in retirement.
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Contributions | After-tax (no deduction) | Often tax-deductible now |
| Growth | Tax-free | Tax-deferred |
| Withdrawals | Tax-free if qualified | Taxed as income |
| Required withdrawals | None in your lifetime | Required from age 73 |
| Best when | Higher tax rate later | Higher tax rate now |
Worth knowing
Five things about Roth IRAs
The rules that decide how much of the advantage you actually keep.
5-year rule
Age plus five years
Growth comes out tax-free only after the account is five years old and you are 59½. Both conditions matter, so open one sooner rather than later.
income limits apply
High earners phase out
Above certain incomes you cannot contribute directly. A backdoor Roth is a legal workaround, but it has its own rules — worth researching first.
no forced withdrawals
No RMDs
Unlike a traditional IRA or 401(k), a Roth has no required minimum distributions in your lifetime, so it can keep growing untouched.
contributions are reachable
Your deposits are liquid
You can pull out what you contributed, any time, tax- and penalty-free. Only the growth is locked behind the rules.
catch-up over 50
Older savers add more
Once you turn 50, the IRS lets you contribute an extra catch-up amount each year — a way to close a late-start gap.
max the match first
Free money comes first
If your employer matches a 401(k), capture that before funding a Roth IRA — the match is an instant return nothing else beats.
Quick chart
Roth balance by contribution and time
Tax-free balance at 7% from a standing start — read the row for your yearly contribution and the column for your runway.
| Per year | 10 yrs | 20 yrs | 30 yrs | 40 yrs |
|---|---|---|---|---|
| $3,000 | $43,271 | $130,232 | $304,993 | $656,203 |
| $5,000 | $72,119 | $217,053 | $508,321 | $1,093,672 |
| $7,000 | $100,966 | $303,874 | $711,650 | $1,531,141 |
Assumes 7% a year, no starting balance, contributions spread monthly. All tax-free at withdrawal.
How we calculate this
The formula and our assumptions
Roth growth is ordinary future value; the tax saving is a simple comparison.
FV = PV·(1+r)^n + PMT·((1+r)^n − 1) ÷ r
The balance
PV is the current balance, PMT the monthly slice of your annual contribution, r the return over twelve, and n the months.
tax saved = growth × tax rate
The Roth advantage
We multiply the growth by the rate a taxable account would pay to show what a Roth keeps out of the tax collector's hands — an illustration, not a precise tax forecast.
- The annual contribution is spread evenly across twelve months.
- The return is a steady average; real markets vary year to year.
- The tax-saved figure assumes the growth would otherwise be taxed at the rate you enter.
- Qualified Roth withdrawals require age 59½ and a 5-year-old account; limits apply.
Sources
Where the method comes from
- Internal Revenue Service — Roth IRA rules, contribution and income limits, the 5-year rule.
- U.S. Securities and Exchange Commission (Investor.gov) — IRAs and compound growth.
- Standard future-value-of-an-annuity formula for regular contributions.
FAQ
Common questions
It compounds tax-free: FV = PV·(1+r)^n + PMT·((1+r)^n − 1) ÷ r, where PV is the current balance, PMT the monthly contribution, r the return over twelve, and n the months. Starting at $10,000 and contributing $7,000 a year for 35 years at 7% grows to about $1,165,677 — and because it is a Roth, every dollar comes out tax-free.
You fund a Roth with after-tax money, so contributions do not lower your taxable income now — but the growth and qualified withdrawals in retirement are completely tax-free. A traditional IRA is the reverse: contributions may be deductible now, but withdrawals are taxed as income later. A Roth wins when you expect to be in the same or a higher tax bracket in retirement.
The IRS sets the limit each year — recently about $7,000, or $8,000 if you are 50 or older (the catch-up amount). That is a combined cap across all your IRAs. High earners face income limits that reduce or remove the ability to contribute directly. Because the figures change, check the current IRS limits before maxing out.
The saving is the tax you never pay on the growth. In the example the account earns $910,677 of growth; in a taxable account that gain might be taxed around 15%, or roughly $136,602. In a Roth, none of it is taxed on qualified withdrawal — that untaxed growth is the whole point of the account.
Withdrawals of growth are tax- and penalty-free once the account has been open at least five years and you are 59½ or older. Your own contributions (not the growth) can be withdrawn any time without tax or penalty, because you already paid tax on them. Taking out growth early usually triggers taxes and a 10% penalty, with some exceptions.
They serve different roles. A 401(k) often comes with an employer match — free money you should capture first — and much higher contribution limits, but a traditional 401(k) is taxed on withdrawal. A Roth IRA has lower limits but tax-free growth and more investment choice. Many people use both: the 401(k) up to the match, then a Roth IRA.
It depends on how the money is invested — a Roth IRA is an account, not an investment. A diversified stock-and-bond mix is commonly modelled at 6% to 8% a year over the long run, with an all-stock portfolio higher and riskier. No return is guaranteed, so test a conservative rate to see your plan's floor.
Yes — the Roth is just the wrapper; your returns depend on what you hold inside it. If you invest in stock funds, the balance falls in a down market and rises in an up one. The tax advantage does not protect against investment losses, only against tax on the gains. Over long horizons, staying invested has historically rewarded the risk.
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Ugo CharlesBuilt and fact-checked against our editorial standards · Last updated June 2026
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