Roth IRA Calculator
A Roth IRA is one of the most popular ways to save for retirement, and it offers some big tax advantages, including the ability to withdraw your money tax-free in retirement. Traditional IRAs offer the potential for tax deductibility in the present, while Roth IRAs are funded with after-tax dollars. Use this Roth IRA calculator to find the amount you could save using a Roth IRA.
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Definitions
- Starting balance: The current balance of your Roth IRA.
- Annual contributions: The amount you will contribute to your Roth IRA each year. This calculator assumes that you make your contribution at the beginning of each year. It is important to note that this is the maximum total contributed to all of your IRA accounts. The contribution limit is adjusted for inflation over time.
If you are age 50 or older you can make an additional 'catch-up' contribution of $1,000. The 'catch-up' contribution amount of $1,000 is not subject to a cost-of-living adjustment. In order to qualify for the 'catch-up' contribution, you must turn 50 by the end of the year in which you are making the contribution.
- If the contribution amount you input is less than $6,500, the calculator will use that number for all ages until retirement age.
- If the contribution amount is between $6,500 and $7,500, then $6,500 will be applied for all years until age 50, with the amount you input being used for all ages beyond that.
- If the amount you input is over $7,500 then the calculator assumes you want to maximize contributions, so both contribution limits will be applied, as determined by your age.
It is important to note that Roth IRA contributions are limited for higher incomes. If your income falls in a 'phase-out' range you are allowed only a prorated Roth IRA contribution. If your income exceeds the phase-out range, you do not qualify for any Roth IRA contribution. For the purposes of this calculator, we assume that your income does not limit your ability to contribute to a Roth IRA. The table below summarizes the income 'phase-out' ranges for Roth IRAs.
Roth IRA 2023 Contributions Phaseout
| Tax filing status | 2023 Income Phase-Out Range |
|---|---|
| Married filing jointly or head of household | $218,000 - $228,000 |
| Single | $138,000 - $153,000 |
| Married filing separately | $0 - $10,000 |
*For the purposes of this calculator, we assume you are not Married filing separately and contributing to a Roth IRA. High income individuals have the option to make non-deductible traditional IRA contributions and then immediately convert them to a Roth IRA. This process, known as a backdoor Roth IRA, can effectively eliminate the income phase-out for Roth IRA contributions.
- Current age: Your current age.
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Age of retirement: Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions to your IRA. So if you retire at age 65, your last contribution is assumed to have happened when you were actually 64.
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Expected rate of return: The annual rate of return for your IRA. This calculator assumes that your return is compounded annually and your contributions are made at the beginning of each year. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending April 28, 2023, had an annual compounded rate of return of 12.37 percent, including reinvestment of dividends. The S&P 500 has returned about 10 percent annually over the long term.Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances and are typically FDIC insured.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that Separate Account investment funds and/or investment companies may charge. - Marginal tax rate: The marginal tax rate you expect to pay on your taxable investments. Use the table below to assist you in estimating your federal tax rate. The taxable account results assume that all investment returns are taxed as income and/or short-term capital gains.
Filing status and income tax rates 2022-2023
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 to $20,550 | $0 to $10,275 | $0 to $14,650 | $0 to $10,275 |
| 12% | $20,551 to $83,550 | $10,276 to $41,775 | $14,651 to $55,900 | $10,276 to $41,775 |
| 22% | $41,776 to $89,075 | $41,776 to $89,075 | $55,901 to $89,050 | $83,551 to $178,150 |
| 24% | $178,151 to $340,100 | $89,076 to $170,050 | $89,051 to $170,050 | $89,076 to $170,050 |
| 32% | $340,101 to $431,900 | $170,051 to $215,950 | $170,051 to $215,950 | $170,051 to $215,950 |
| 35% | $431,901 to $647,850 | $215,951 to $539,900 | $215,951 to $539,900 | $215,951 to $323,925 |
| 37% | $647,851 or more | $539,901 or more | $539,901 or more | $323,926 or more |
- Total contributions: The total amount contributed to this IRA.
- Maximize contributions: Check this box to contribute the maximum allowed to your account each year. This includes the additional catch-up contribution available when you are age 50 or over.
- Total taxable savings: The total amount you would have accumulated by retirement in a taxable savings account.
- Roth total at retirement: Total value in your Roth IRA at your retirement. To take any distributions that include earnings that are tax free, the Roth IRA must be opened for 5 tax years. Eligible tax free distributions include those taken for death or disability, after age 59-1/2, or for a first time home purchase.