Roth IRA Calculators

Below, you'll find a number of links to "Roth IRA calculators."

If you don't have access to a hand-held financial calculator where you can plug in...

1) net present value

2) number of years to retirement, and

3) the expected annual interest rate

...and thus, calculate the future value of your holdings...

These online calculators will essentially perform the same function.

However, keep in mind that these Roth IRA calculators are beneficial as a general guide, not as an authoritative source.

Any number of variables factor into your financial planning and your specific Roth IRA investment strategy.

However, these calculators only provide you with ballpark estimates for any number of questions, such as the annual compounded rate of return you need to achieve your retirement goals...

Or how much you need to contribute annually in order to meet your financial goals.

Keeping these questions in mind, playing around with a financial calculator can be of great benefit.

Projecting Your Roth IRA Savings

The two calculators below will assist you in determing the parameters of your savings plan. Hopefully, they can assist you in answering the following questions:

• How much do I need to contribute to my Roth IRA on an annual basis?
• What sort of annual rate of return do I need to receive on my Roth IRA?
• How much of an added benefit will an extra year of Roth IRA contributions provide?

Roth IRA Savings Calculator
www.dinkytown.net
This is an excellent Roth IRA calculator which allows you to enter the current balance of your account (if you already have a Roth IRA), your current age, your expected retirement age, your expected rate of return, and your expected annual contributions. When you hit "Calculate," it generates a graph projecting your future Roth IRA savings. You can also enter your expected marginal tax rate so that the calculator can show you the projected value of the same amount of money invested outside of a Roth IRA. This provides a vivid illustration of the tremendous benefits of a Roth IRA versus non-tax exempt alternatives.

PlanningTips.Com Roth IRA Calculator
www.planningtips.com
This Roth IRA calculator offers many of the same benefits as the one above. However, it also offers a few more variables. You can input your expected rate of return prior to retirement as well as after retirement. You can also input an expected rate of inflation as well as your current income tax bracket and expected income tax bracket in retirement. When you hit "Calculate," it provides you with graphs and charts outlining your expected results for a Roth IRA, a traditional IRA, and a regular taxable savings account. Again, this should provide a clear and visual illustration of the immense benefits of investing your retirement savings in a Roth IRA.

Roth IRA vs. Traditional IRA

The calculators listed below offer many of the same functions as the two above, while specifically focusing on what's best for your individual financial situation ? a traditional IRA or a Roth IRA. However, this begs the question: why not have both? The law doesn't prohibit a person from having a traditional IRA and a Roth IRA. So invest in both if you're capable and you qualify. However, if it comes down to a choice between the two, I highly recommend the Roth IRA. Why?

Because withdrawals from a Roth IRA are tax free. While the tax laws will inevitably change in the next thirty years, it's unlikely that the Roth IRA's tax exempt status will change, although it's quite possible that the Roth IRA itself could be eliminated (making it all the more important to start one now while the window of opportunity is still open). Instead, it's much more likely that marginal tax rates will increase across the board in order to pay of the massive budget deficits of past and future years. If this happens, the money in a traditional IRA will be worth less because withdrawals will be taxed more. However, tax exempt Roth IRA withdrawals will continue to be worth 100% of their value.

So take the calculators below with a grain of salt. Traditional IRAs and Roth IRAs are not an either/or proposition. Don't use these calculators to choose between two IRA plans. Instead, use them only for general retirement planning purposes.

MSN Money Roth IRA Calculator
moneycentral.msn.com
This Roth IRA calculator offers a bit more than the standard calculators featured above. It asks the same standard questions, but probes further into your individual financial situation, asking a series of questions regarding such topics as your tax filing status, whether or not you have a tax plan at work, your current income information, state taxes, and other pertinent information. When you reach the final screen, the calculator gives you an overall future value figure for your Roth IRA as well as the expected dollar amount of your annual withdrawals (before and after inflation). This can be especially beneficial for helping you determine your current financial goals by giving you an annual dollar figure to shoot for.

Roth IRA Comparison Calculator
www.moneychimp.com
This Roth IRA calculator takes into account your current IRA balance (if any), your expected retirement date, the number of years you expect to be retired, and your current tax rate as well as your expected tax rate following retirement. When you hit "Calculate," it provides you with an after-tax dollar figure you can expect to withdraw from either a Roth IRA or a traditional IRA. However, keep in mind what we said earlier ? future rates can be expected to be much higher, skewing the returns you'll receive on a traditional IRA which is taxable upon withdrawal.

Last Updated: 6/20/2009

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