*The estimated tax savings assumes your earnings would have been taxed at your current rate. In a Roth IRA, qualified withdrawals are tax-free.
How the Fidelity Roth IRA Calculator Works
Planning for retirement requires understanding how different tax advantages impact your long-term wealth. This calculator specifically projects the growth of a Roth IRA, which is unique because you contribute "after-tax" dollars today in exchange for tax-free withdrawals in the future.
Inputs Explained
Current Age & Retirement Age: This determines your "time horizon." The longer the time until retirement, the more your money benefits from compounding.
Annual Contribution: For 2024, the IRS limit is $7,000 (or $8,000 if you are age 50 or older).
Expected Annual Return: While the stock market historically averages around 7-10% (nominal), many investors use a more conservative 6-7% for planning.
Current Tax Rate: This helps estimate the value of the tax-free growth benefit compared to a taxable brokerage account.
Example Calculation
If you are 25 years old with $5,000 currently in your Roth IRA and you contribute $500 monthly ($6,000 annually) at a 7% return rate until age 65:
Total Contributions
$245,000
Compounded Interest
$1,051,650
Total Roth IRA Balance
$1,296,650
The Roth Advantage
The primary benefit of a Roth IRA is that the $1,051,650 in interest earned in the example above is completely tax-free when withdrawn in retirement. In a traditional account, you could owe 15% to 37% in taxes on that gain, potentially costing you hundreds of thousands of dollars.
function calculateRothIRA() {
var currentAge = parseFloat(document.getElementById('currentAge').value);
var retirementAge = parseFloat(document.getElementById('retirementAge').value);
var startingBalance = parseFloat(document.getElementById('startingBalance').value);
var annualContribution = parseFloat(document.getElementById('annualContribution').value);
var annualReturn = parseFloat(document.getElementById('annualReturn').value) / 100;
var taxRate = parseFloat(document.getElementById('taxRate').value) / 100;
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(startingBalance) || isNaN(annualContribution) || isNaN(annualReturn)) {
alert("Please enter valid numbers in all fields.");
return;
}
var years = retirementAge – currentAge;
if (years 0) {
fvContributions = annualContribution * (Math.pow((1 + annualReturn), years) – 1) / annualReturn;
} else {
fvContributions = annualContribution * years;
}
var totalValue = fvStartingBalance + fvContributions;
var totalContributed = startingBalance + (annualContribution * years);
var totalEarnings = totalValue – totalContributed;
var taxSavingsValue = totalEarnings * taxRate;
document.getElementById('totalValue').innerText = '$' + totalValue.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('totalContributions').innerText = '$' + totalContributed.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('taxSavings').innerText = '$' + taxSavingsValue.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('roth-result-box').style.display = 'block';
}