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Roth IRA Calculator

Updated · By the CalculatorDash editorial team · How we check our maths

Quick answer

A Roth IRA grows tax-free and qualified withdrawals are tax-free too. Contributing $7,000 a year from age 30 to 65 at a 7% average return grows to about $968,000, of which roughly $723,000 is growth you never pay tax on.

Roth IRA at retirement

years
years
$
$
%
%

Balance at retirement

$967,658

Total contributions
$245,000
Tax-free growth
$722,658
Tax avoided on the growth
$158,985

Compared with paying ordinary income tax on the growth, as with a pre-tax account.

Years of growth
35 years

Returns are not guaranteed. Contribution limits and income limits change; check the IRS figures for the current year.

How this calculator works

A Roth IRA is a US retirement account funded with money you have already paid tax on. In exchange, the investments grow without tax and qualified withdrawals after age 59½, once the account is at least five years old, are tax-free. That makes it especially valuable for younger savers who expect to be in a higher bracket later.

The calculator compounds your current balance and a yearly contribution at your expected return until retirement. It then splits the result into what you put in and what the market added, and estimates the tax you avoid on that growth compared with an account taxed on withdrawal.

A 7% average return is a common long-run assumption for a stock-heavy portfolio before inflation; use 4–5% if you want the result in today's money. Returns in any single year will be very different from the average.

The formula

Balance at retirement
balance × (1 + r)^years + contribution × ((1 + r)^years − 1) ÷ r
Tax-free growth
balance at retirement − total contributions
Tax avoided
growth × your expected retirement tax rate

Worked example

Contributing $7,000 a year for 35 years at 7% gives about $967,700. You put in $245,000, so about $722,700 is growth. At a 22% tax rate, that is roughly $159,000 of tax you never pay.

Tips

  1. 01Contribute early in the year to give the money more time to grow.
  2. 02If your income is above the Roth limit, ask a tax professional about a 'backdoor' Roth conversion.
  3. 03Your contributions (not earnings) can be withdrawn at any time without tax or penalty, which makes a Roth a flexible back-up fund.

Frequently asked questions

Roth IRA or traditional IRA?

Roth if you expect a higher tax rate in retirement than today; traditional if you expect a lower one. Many people use both to spread the risk.

What return should I assume?

Many planners use 6–7% for a stock-heavy mix over decades, or 4–5% to see the answer in today's dollars.

Can I have a Roth IRA and a 401(k)?

Yes. The limits are separate. Many people take the employer match in the 401(k) first, then fund a Roth IRA.