Roth IRA Investment Calculator

Your-Roth-IRA.Com

How To Use The Roth IRA Investment Calculator

Simply fill out the fields in the Roth IRA investment calculator featured above, using a value for each of the following items:

• Starting Balance
• Annual Contribution
• Desired Retirement Balance
• Inflation Rate
• Current Age, and
• Retirement Age

Not sure what these terms mean? Not sure what numbers to put in?

Use the section below as a guide for your Roth IRA investment calculations.

Then, as you fill in each field with numbers customized to your situation, the calculator will automatically update to reveal the annual compound rate of return you need to generate in order to achieve your investing goals.

Roth IRA Investment Calculator Terms

Below is an explanation of each calculator term:

Starting Balance
This is the current balance in your Roth IRA (if you already have one). If you're still considering opening a Roth IRA, put zero in this field (since you don't have an existing balance).

Need an example?

Let's say, you already have $25,000 in your Roth IRA.

If so, then put $25,000 in the "Starting Balance" field.

Annual Contribution
This is the amount you plan to contribute to your Roth IRA on an annual basis.

For example, let's say you plan to contribute $250 per month to your Roth IRA. If so, then put $3,000 in the "Annual Contribution" field.

The default for this field is set to $5,000 because that's the maximum contribution if you're under age 50.

However, the maximum contribution is $6,000 for people age 50 and older. So if you're 50 or older and plan to make the maximum contribution, put $6,000 in the "Annual Contribution" field.

If you're married, and both you and your spouse intend to make the maximum contribution, then input the appropriate amount in this field.

For example, if both you and your spouse are over age 50 and eligible to contribute the maximum amount, then put $12,000 in the "Annual Contribution" field.

Desired Retirement Balance
This the amount of money you want to have in your Roth IRA when you retire.

For instance, let's say you calculate that you'll need $1,000,000 when you retire in order to maintain your current standard of living.

If so, then put $1,000,000 in the "Desired Retirement Balance" field.

Inflation Rate
This is the annual rate of inflation you project for the timeframe in which your Roth IRA savings is invested.

It's important that you don't underestimate the rate of inflation since it will eat away at the purchasing power of your savings over time.

The default rate is set at 4.1% - the approximate annual rate of inflation over the past seven decades.

However, if you're more conservative, you might want to use a higher rate of inflation.

Current Age
This is fairly self-explanatory. Just check your birth certificate if you're not sure!

Seriously, though, you might want to consider an older age for this field if you're not yet investing in your Roth IRA but plan to do so in the future.

Retirement Age
This is the age at which you'd like to retire, and while you'd probably like to make this the same as your current age, that may not be realistic... (although I hope I'm wrong!)

Make sure you put a realistic age in the "Retirement Age" field in order to get the most accurate calculation of your inflation-adjusted Roth IRA savings.

Necessary Rate of Return to Achieve Your Goal
This is the annual compound rate of return you need to generate on your investments in order to achieve your retirement goal.

The Roth IRA investment calculator automatically updates this value when you fill in the aforementioned fields.

Unlike some Roth IRA calculators, your desired retirement balance is calculated in terms of today's dollars - meaning a million dollar retirement nest egg will retain the equivalent purchasing power of a million dollars today.

Calculating Your Investment Plan

Once you determine the annual compound rate of return you need to achieve in order to meet your retirement goal, then you can plan your investments accordingly.

For instance, if you need a high rate of return, you most likely want to choose stocks over bonds for long term.

But if you need a relatively low rate of return, you might choose the less volatile return offered by the bond market.

Additional Roth IRA Calculators

Roth IRA Calculator - This is our most basic Roth IRA calculator. Simply input the present value of your Roth IRA, along with your expected annual contributions, age, and rate of return, to get a projected value for your Roth IRA when you reach retirement age.

Roth IRA vs. Traditional IRA Calculator - Use this calculator to determine which retirement account is best for you - a Roth IRA or a Traditional IRA. Discover why your current tax rate and expected future tax rate play a pivotal role in your decision.

Roth IRA Contribution Calculator - Use this calculator to determine the dollar amount of the annual contribution you need to make in order to meet your desired Roth IRA retirement balance.

Roth IRA Retirement Calculator - Use this calculator to estimate your annual inflation-adjusted income in retirement based on your Roth IRA starting balance, annual contributions, rate of return, and other variables.

Return to the top of Roth IRA Investment Calculator

Return to Roth IRA Calculators

Return to the Your Roth IRA Website Homepage