Your projected Roth TSP balance at retirement is: $0.00
Understanding the Roth TSP Calculator
The Roth Thrift Savings Plan (TSP) is a retirement savings plan for federal employees and members of the uniformed services. Unlike a traditional TSP, contributions to a Roth TSP are made with after-tax dollars. The primary advantage of a Roth TSP is that qualified withdrawals in retirement are tax-free. This calculator helps you project the potential future value of your Roth TSP based on your current savings, planned contributions, and an assumed rate of growth.
How the Roth TSP Calculator Works
This calculator uses a compound interest formula to estimate your future Roth TSP balance. It takes into account:
Current Age and Desired Retirement Age: This determines the number of years you have left to save and invest.
Annual Contributions: The amount you plan to contribute to your Roth TSP each year.
Current TSP Balance: Any existing savings you already have in your TSP.
Assumed Annual Growth Rate: The average annual rate of return you expect your investments to yield. This is a crucial assumption and can vary significantly.
The Mathematical Formula
The calculator essentially performs two main calculations:
Future Value of Current Balance: It calculates how much your existing TSP balance will grow over time using the compound interest formula:
FV_current = PV * (1 + r)^n Where:
FV_current is the Future Value of the current balance.
PV is the Present Value (current TSP balance).
r is the annual growth rate (as a decimal).
n is the number of years until retirement (Retirement Age – Current Age).
Future Value of Annual Contributions (Annuity): It calculates the future value of your stream of annual contributions using the future value of an ordinary annuity formula:
FV_contributions = P * [((1 + r)^n – 1) / r] Where:
FV_contributions is the Future Value of the contributions.
P is the annual contribution amount.
r is the annual growth rate (as a decimal).
n is the number of years until retirement.
The total projected Roth TSP balance is the sum of these two values:
Total FV = FV_current + FV_contributions
Note: This calculation is a simplified projection. It assumes contributions are made at the end of each year and the growth rate is constant. Actual results may vary.
Key Considerations for Roth TSP
Tax-Free Withdrawals: The primary benefit is that qualified distributions in retirement are federal income tax-free.
Contribution Limits: Be aware of the annual IRS contribution limits for TSP. This calculator does not enforce those limits.
Investment Choices: Your actual returns will depend on the investment funds you choose within the TSP and market performance.
Eligibility: Ensure you meet the eligibility requirements for contributing to the TSP.
This calculator is a tool for financial planning and should not be considered definitive financial advice. It's always recommended to consult with a qualified financial advisor for personalized guidance.
function calculateRothTsp() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(document.getElementById("retirementAge").value);
var annualContributions = parseFloat(document.getElementById("annualContributions").value);
var currentTspBalance = parseFloat(document.getElementById("currentTspBalance").value);
var annualGrowthRate = parseFloat(document.getElementById("annualGrowthRate").value);
var resultElement = document.getElementById("projectedBalance");
resultElement.textContent = "$0.00"; // Reset to default
// Input validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(annualContributions) || isNaN(currentTspBalance) || isNaN(annualGrowthRate)) {
alert("Please enter valid numbers for all fields.");
return;
}
if (currentAge <= 0 || retirementAge <= 0 || annualContributions < 0 || currentTspBalance < 0 || annualGrowthRate < -100) {
alert("Please enter reasonable positive values for age, contributions, balance, and a realistic growth rate.");
return;
}
if (retirementAge <= currentAge) {
alert("Desired retirement age must be greater than current age.");
return;
}
var yearsToRetirement = retirementAge – currentAge;
var growthRateDecimal = annualGrowthRate / 100;
// Calculate Future Value of Current Balance
var futureValueOfCurrent = currentTspBalance * Math.pow(1 + growthRateDecimal, yearsToRetirement);
// Calculate Future Value of Annual Contributions (Annuity)
var futureValueOfContributions = 0;
if (growthRateDecimal !== 0) {
futureValueOfContributions = annualContributions * ( (Math.pow(1 + growthRateDecimal, yearsToRetirement) – 1) / growthRateDecimal );
} else {
// If growth rate is 0, FV of annuity is simply contributions * years
futureValueOfContributions = annualContributions * yearsToRetirement;
}
var totalProjectedBalance = futureValueOfCurrent + futureValueOfContributions;
// Format the result to two decimal places
var formattedBalance = totalProjectedBalance.toLocaleString(undefined, {
minimumFractionDigits: 2,
maximumFractionDigits: 2
});
resultElement.textContent = "$" + formattedBalance;
}