*Calculations assume contributions are made at the beginning of each year and compounded annually. Roth IRA withdrawals are generally tax-free in retirement.
Understanding the Roth IRA Advantage
A Roth IRA is one of the most powerful retirement savings vehicles available because it offers tax-free growth and tax-free withdrawals in retirement. Unlike a Traditional IRA or 401(k), you contribute "after-tax" dollars today, meaning you don't get a tax deduction now, but you won't owe the IRS a single cent on your earnings when you withdraw them after age 59½.
How This Calculator Works
The calculation uses the future value formula for an annuity due (contributions made at the start of the year):
n: Number of years until retirement (Retirement Age – Current Age).
Why Your Tax Rate Matters
The "Tax Savings" output compares your Roth IRA to a Traditional IRA. With a Traditional IRA, you would owe taxes on the entire balance upon withdrawal. By using a Roth IRA, you effectively save the amount you would have paid in taxes at your projected retirement tax rate.
2024 Roth IRA Guidelines
For 2024, the annual contribution limit is $7,000 for those under age 50, and $8,000 for those age 50 and older (including the $1,000 catch-up contribution). Note that Roth IRAs have income eligibility limits; if your Modified Adjusted Gross Income (MAGI) exceeds certain thresholds, your ability to contribute may be reduced or eliminated.
function calculateRothIRA() {
var currentAge = parseFloat(document.getElementById('roth_currentAge').value);
var retireAge = parseFloat(document.getElementById('roth_retireAge').value);
var startBal = parseFloat(document.getElementById('roth_startingBalance').value);
var annualCont = parseFloat(document.getElementById('roth_annualContribution').value);
var rateReturn = parseFloat(document.getElementById('roth_rateOfReturn').value) / 100;
var taxRateRetire = parseFloat(document.getElementById('roth_taxRate').value) / 100;
if (isNaN(currentAge) || isNaN(retireAge) || isNaN(startBal) || isNaN(annualCont) || isNaN(rateReturn) || isNaN(taxRateRetire)) {
alert("Please enter valid numeric values in all fields.");
return;
}
if (retireAge 0) {
fvCont = annualCont * ((Math.pow(1 + rateReturn, years) – 1) / rateReturn) * (1 + rateReturn);
} else {
fvCont = annualCont * years;
}
totalBalance = fvStart + fvCont;
var totalEarnings = totalBalance – (startBal + totalContributions);
// Tax savings calculation
// If it were a Traditional IRA, you'd pay taxes on the whole amount at retirement
var taxSavings = totalBalance * taxRateRetire;
// Display Results
document.getElementById('roth_results').style.display = 'block';
document.getElementById('res_totalBalance').innerText = formatCurrency(totalBalance);
document.getElementById('res_totalContributions').innerText = formatCurrency(totalContributions + startBal);
document.getElementById('res_totalEarnings').innerText = formatCurrency(totalEarnings);
document.getElementById('res_taxSavings').innerText = formatCurrency(taxSavings);
// Scroll to results
document.getElementById('roth_results').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}
function formatCurrency(num) {
return '$' + num.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}