A Roth IRA is one of the most powerful tools for retirement planning because it offers tax-free growth and tax-free withdrawals in retirement. This calculator helps you estimate the future value of your Roth IRA account by factoring in compound interest over your specific investment horizon.
The Power of Compound Interest in a Roth IRA
Unlike a Traditional IRA or 401(k), you fund a Roth IRA with "after-tax" dollars. This means you don't get a tax deduction today, but every dollar your investment earns is yours to keep. The formula used in this calculator accounts for two primary components:
The Future Value of Your Current Balance: Your existing savings grow exponentially based on your expected rate of return and the number of years until retirement.
The Future Value of an Annuity: Your recurring annual contributions also grow over time, with each subsequent year of contributions having less time to compound than the previous year.
Roth IRA Contribution Limits and Rules
When using this calculator, it is important to remember that the IRS sets annual contribution limits. For 2024, the limit is $7,000 for those under age 50 and $8,000 for those 50 or older (including the $1,000 catch-up contribution). Always ensure your "Annual Contribution" input aligns with current IRS regulations and your income eligibility.
Example Calculation
Let's look at a realistic scenario for a young professional:
Current Age: 25
Retirement Age: 65 (40 years of growth)
Starting Balance: $2,000
Annual Contribution: $6,500
Expected Return: 8%
In this scenario, the initial $2,000 would grow to approximately $43,449. However, the consistent annual contributions of $6,500 would add a staggering $1,683,864. Totaling over $1.7 million—all of which would be completely tax-free upon withdrawal after age 59½.
function calculateRothIRA() {
var currentAge = parseFloat(document.getElementById('currentAge').value);
var retirementAge = parseFloat(document.getElementById('retirementAge').value);
var currentBalance = parseFloat(document.getElementById('currentBalance').value);
var annualContribution = parseFloat(document.getElementById('annualContribution').value);
var expectedReturn = parseFloat(document.getElementById('expectedReturn').value) / 100;
var resultDiv = document.getElementById('rothResult');
var totalValueSpan = document.getElementById('totalValue');
var summaryText = document.getElementById('summaryText');
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentBalance) || isNaN(annualContribution) || isNaN(expectedReturn)) {
alert('Please enter valid numerical values in all fields.');
return;
}
var yearsToGrow = retirementAge – currentAge;
if (yearsToGrow <= 0) {
alert('Retirement age must be greater than your current age.');
return;
}
var futureValue;
if (expectedReturn === 0) {
futureValue = currentBalance + (annualContribution * yearsToGrow);
} else {
// FV of current balance: P(1+r)^n
var fvCurrent = currentBalance * Math.pow(1 + expectedReturn, yearsToGrow);
// FV of annual contributions: PMT * (((1+r)^n – 1) / r)
var fvContributions = annualContribution * ((Math.pow(1 + expectedReturn, yearsToGrow) – 1) / expectedReturn);
futureValue = fvCurrent + fvContributions;
}
var totalContributed = currentBalance + (annualContribution * yearsToGrow);
var totalInterest = futureValue – totalContributed;
resultDiv.style.display = 'block';
totalValueSpan.innerText = '$' + futureValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
summaryText.innerHTML = 'By age ' + retirementAge + ', your Roth IRA is projected to be worth $' +
futureValue.toLocaleString(undefined, {maximumFractionDigits: 0}) + '. Throughout your investment period, you will have contributed a total of $' +
totalContributed.toLocaleString(undefined, {maximumFractionDigits: 0}) + ', earning $' +
totalInterest.toLocaleString(undefined, {maximumFractionDigits: 0}) + ' in tax-free interest growth.';
resultDiv.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}