IRA Calculator
Estimate your Traditional or Roth IRA savings growth and compound yields over your working career.
Retirement Projection
Estimated Balance at Age 65
$1,029,912.43
Total Principal Contributed
$215,000.00
Estimated Interest Earnings
$814,912.43
Understanding IRA Compounding Models
IRAs grow using compound interest, where your annual investments build dividends that are reinvested to grow exponentially. The equation used to calculate the Future Value (FV) of an IRA is:
FV = P * (1 + r)^T + C * [ ((1 + r)^T - 1) / r ]
Where:
- FV is the ending retirement savings balance.
- P is your starting balance.
- C is your recurring annual contribution.
- r is the expected annual rate of return as a decimal (e.g. 7% = 0.07).
- T is the total investment years (Retirement Age - Current Age).
Frequently Asked Questions
What is the difference between a Traditional and a Roth IRA?
Traditional IRA contributions are tax-deductible now, but withdrawals in retirement are taxed as ordinary income. Roth IRA contributions are made with post-tax dollars, meaning all investment growth and retirement withdrawals are completely tax-free.
What is the annual contribution limit for an IRA?
For the tax year 2024, the IRS contribution limit for traditional/Roth IRAs is $7,000 ($8,000 for individuals aged 50 or older). These limits are indexed and may increase over time.