Roth IRA Savings Calculator

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How To Use The Roth IRA Savings Calculator

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

• Starting Balance
• Annual Contribution
• 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 savings calculations.

Then, as you fill in each field with numbers customized to your situation, the calculator will automatically update to reveal your projected inflation-adjusted balance at retirement.

Roth IRA Savings 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.

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 inflation-adjusted Roth IRA savings.

Balance At Retirement
This is the projected inflation-adjusted value of your Roth IRA when you retire.

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

Unlike some Roth IRA calculators, this value represents your savings in terms of today's dollars - meaning a million dollar nest egg will retain the equivalent purchasing power of a million dollars today.

Calculating Your Retirement Plans

Understanding the impact of inflation on your retirement savings is essential in creating a savings plan which will provide you with the money you need in your golden years.

While this Roth IRA savings calculator provides you with a ballpark estimate of your inflation-adjusted Roth IRA savings, 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 be much more likely to achieve your retirement savings goals.

Additional Roth IRA Calculators

Roth IRA Conversion Calculator - Use this calculator to compare the projected after-tax value of your Traditional IRA or 401k to the projected tax-free value of the same funds in your Roth IRA. Comparing the two will help you determine if a Roth IRA conversion is right for you.

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 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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