Estimate your potential Roth 401(k) savings and the tax-free growth over time. Enter your details below.
Understanding Roth 401(k) Contributions and Growth
The Roth 401(k) is a powerful retirement savings tool that offers tax advantages distinct from a traditional 401(k).
Unlike traditional contributions, which are made pre-tax, Roth 401(k) contributions are made with after-tax dollars.
The primary benefit is that qualified withdrawals in retirement are completely tax-free, including all the investment earnings.
How the Calculator Works:
This calculator estimates the total amount you could contribute to a Roth 401(k) over your working years and the potential future value of those contributions, assuming a consistent investment growth rate.
Annual Income: Your gross income per year.
Contribution Rate: The percentage of your annual income you plan to contribute to your Roth 401(k).
Current Age: Your current age.
Desired Retirement Age: The age at which you plan to retire.
Assumed Annual Investment Growth Rate: The average annual percentage return you expect your investments to generate.
The Math Behind the Calculation:
The calculator performs two main calculations:
Total Contributions:
First, it determines your annual contribution:
Annual Contribution = Annual Income * (Contribution Rate / 100) Then, it calculates the number of years until retirement:
Years to Retirement = Desired Retirement Age - Current Age Finally, it sums up all contributions:
Total Contributions = Annual Contribution * Years to Retirement
Future Value of Contributions (Compound Growth):
This uses the future value of an ordinary annuity formula to estimate the growth of your contributions over time. Each year's contribution grows with compound interest. The formula is complex, but conceptually, it sums the future value of each individual contribution:
Future Value = P * [((1 + r)^n - 1) / r] Where:
P = Annual Contribution
r = Annual Investment Growth Rate (as a decimal)
n = Years to Retirement
The calculator simplifies this by calculating the future value based on the total contributions and the growth rate over the period.
Why Choose a Roth 401(k)?
A Roth 401(k) is ideal for individuals who anticipate being in a higher tax bracket in retirement than they are currently. By paying taxes now, you lock in tax-free withdrawals later. It's particularly beneficial for younger professionals or those early in their careers who have many years for their investments to grow tax-free. Additionally, employer match contributions typically go into a traditional 401(k) account, even if your contributions are Roth.
Disclaimer: This calculator provides an estimate for informational purposes only. It does not constitute financial advice. Actual investment returns and tax laws may vary. Consult with a qualified financial advisor for personalized guidance.
function calculateRoth401k() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var contributionRate = parseFloat(document.getElementById("contributionRate").value);
var currentAge = parseInt(document.getElementById("currentAge").value);
var retirementAge = parseInt(document.getElementById("retirementAge").value);
var annualGrowthRate = parseFloat(document.getElementById("annualInvestmentGrowth").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || isNaN(contributionRate) || isNaN(currentAge) || isNaN(retirementAge) || isNaN(annualGrowthRate)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || contributionRate 100 || currentAge <= 0 || retirementAge <= 0 || retirementAge <= currentAge || annualGrowthRate 0) {
futureValue = annualContribution * (Math.pow(1 + growthRateDecimal, yearsToRetirement) – 1) / growthRateDecimal;
} else {
// If growth rate is 0, future value is just total contributions
futureValue = totalContributions;
}
// Round to two decimal places for currency
totalContributions = Math.round(totalContributions * 100) / 100;
futureValue = Math.round(futureValue * 100) / 100;
var outputHTML = 'Estimated Total Contributions: $' + totalContributions.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + '';
outputHTML += 'Estimated Future Value at Retirement (Tax-Free): $' + futureValue.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + '';
outputHTML += 'This assumes consistent contributions and an average annual growth rate of ' + annualGrowthRate + '%. Employer match is not included.';
resultDiv.innerHTML = outputHTML;
}