Roth IRA Return Rate Calculator
Projected Results
Total Future Balance
Total Contributions
Total Investment Growth
Understanding Your Roth IRA Return Rate
A Roth IRA (Individual Retirement Account) is one of the most powerful wealth-building tools available to investors. Unlike traditional IRAs, Roth IRAs are funded with after-tax dollars, meaning your withdrawals in retirement are generally 100% tax-free. This calculator helps you visualize how different rates of return and consistent contributions impact your final nest egg.
How the Calculation Works
To determine the future value of your Roth IRA, we use the formula for compound interest with regular monthly contributions. The calculation assumes that your returns are reinvested and compounded monthly.
- Principal Growth: Your starting balance grows based on the annual return rate compounded monthly.
- Annuity Growth: Your monthly contributions are treated as an ordinary annuity, accumulating interest over the specified time horizon.
- The Tax Advantage: Because Roth IRAs grow tax-free, the "Total Investment Growth" shown in the results is exactly what you get to keep, provided you follow IRS withdrawal rules.
Realistic Return Rate Examples
When using this calculator, it is important to use realistic expectations for your annual return rate based on your asset allocation:
| Portfolio Type | Typical Return Range |
|---|---|
| Aggressive (100% Stocks) | 8% – 10% |
| Moderate (60% Stocks / 40% Bonds) | 5% – 7% |
| Conservative (20% Stocks / 80% Bonds) | 3% – 5% |
2024 & 2025 Contribution Limits
Keep in mind that the IRS limits how much you can contribute to a Roth IRA annually. For 2024, the limit is $7,000 (or $8,000 if you are age 50 or older). For 2025, these limits are subject to inflation adjustments. Ensure your "Monthly Contribution" in the calculator does not exceed these annual limits when multiplied by 12.