Roth IRA Contribution Calculator

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How To Use The Roth IRA Contribution Calculator

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

• Desired Retirement Balance
• Starting Balance
• Expected Rate of Return
• 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 contribution calculations.

Then, as you fill in each field with numbers customized to your situation, the calculator will automatically update, revealing the annual contribution you need to make in order to accumulate your desired Roth IRA balance in your retirement years.

Roth IRA Contribution Calculator Terms

Below is an explanation of each calculator term:

Desired Retirement Balance
This is the total value of your Roth IRA nest egg when you retire.

If you want $40,000 per year from your Roth IRA in retirement, and you think you need $1,000,000 for that, then put $1,000,000 in the "Desired Retirement Balance" field.

If you think you'll only need $700,000, then put $700,000 in the field.

Keep in mind, though, that your desired balance is limited by your annual contribution limit, the number of years you plan to save, and a realistic rate of return.

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 $55,000 in your Roth IRA.

If so, then put $55,000 in the "Starting Balance" field.

Expected Rate of Return
This is the annual compound rate of return you anticipate receiving on your Roth IRA savings. This will vary from person to person based investing strategy, fees, types of investments, and other factors.

However, since most people invest their Roth IRA savings in stocks, the default is set to 10.85% - the annual compound rate of return on the S&P 500 from 1959 to 2003.

If you expect a higher or lower rate of return, adjust accordingly.

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 Roth IRA contributions.

Annual Contribution You Need To Make
This is the annual contribution you need to make if you want to achieve your desired retirement balance.

Keep in mind that this amount can not exceed:

• $5,000 if you're under 50 years old
• $6,000 if you're 50 years old or older

However, the maximum annual contribution limit will likely rise over time, so adjust your assumptions according to what you think is realistic and not what you hope is realistic.

Calculating Your Retirement Plans

While this Roth IRA contribution calculator provides you with a rough estimate of the size of the annual contribution you need to make in order to meet your retirement goal, it's important to remember it's only an estimate.

After all, estimates are only as good as their underlying assumptions.

So do lot's of research. Refine your plan and make it better by asking tough questions, such as...

What happens if you get a lower than expected rate of return?

What happens if inflation is higher than you expected?

And how will working an extra year or two impact the value of your Roth IRA?

Explore all possible scenarios, and you'll get a much more accurate annual contribution figure.

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 Savings Calculator - Use this calculator to estimate the inflation-adjusted value of your Roth IRA at retirement age. Experiment with different starting balances, annual contributions, rates of return, inflation rates, and retirement ages to help set the parameters of your retirement plan.

Roth IRA Investment Calculator - Use this calculator to determine the rate of return you need to generate on your Roth IRA savings in order to meet your retirement goal.

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.

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