Roth IRA Calculator

Roth IRA Growth Estimator

Roth IRA Future Value Formula

Formula

\[ FV = P \times \frac{(1 + r)^n - 1}{r} \]

Where:

$FV$ — future value of the Roth IRA account ($)
$P$ — annual contribution amount ($)
$r$ — expected annual rate of return (as a decimal, so 7% = 0.07)
$n$ — number of years of contributions

This is the future value of an ordinary annuity: it assumes you deposit the same amount at the end of each year and that the balance compounds annually at rate $r$. The tax rate does not appear in the formula because qualified Roth IRA withdrawals are tax-free; it is shown in the inputs for comparison purposes only.

Roth IRA – Calculation Example

Example: you contribute $6,000 per year for 30 years and expect an average annual return of 7%.

\[ FV = 6{,}000 \times \frac{(1 + 0.07)^{30} - 1}{0.07} \]

\[ FV = 6{,}000 \times \frac{7.612255 - 1}{0.07} = 6{,}000 \times 94.4608 \approx 566{,}765 \]

Result: the account grows to approximately $566,765. Of that, $180,000 is your own contributions (30 × $6,000) and about $386,765 is investment growth — all of which can be withdrawn tax-free if the distribution is qualified.

How to Use the Calculator

Enter the Annual Deposit Amount — the total you plan to contribute each year (the 2023 limit was $6,500 under age 50, but use the current IRS limit for your age).
Enter your Current Tax Rate — your marginal tax rate today. This is informational only and does not affect the result.
Enter the Number of Years to Save — the years until retirement or until you stop contributing.
Enter the Expected Annual Return — your assumed average yearly growth rate, e.g. 7% for a stock-heavy portfolio.
Read the results: Future Value (Total Roth IRA), Withdrawal Amount (Tax-Free), and Total Interest Earned.

What Is a Roth IRA?

A Roth IRA is an individual retirement account funded with after-tax dollars. You get no tax deduction when you contribute, but your money grows tax-free and qualified withdrawals in retirement — including all investment gains — are completely free of federal income tax. This is the opposite of a Traditional IRA, where contributions may be deductible but withdrawals are taxed as ordinary income.

Because withdrawals are tax-free, the calculator's future value is also the amount you can actually spend. With a taxable or tax-deferred account, the same balance would shrink after taxes, so a Roth balance is effectively "worth more" than an identical pre-tax balance. If you're deciding between the two account types, compare them directly with our Roth vs. Traditional IRA calculator.

The power of a Roth IRA comes from compounding over long horizons. In the example above, more than two-thirds of the final balance is investment growth. This makes starting early far more important than contributing large amounts late: an extra decade of compounding can add more to the final balance than doubling your contribution for half the time.

How to Interpret the Results

The Future Value is the projected account balance at the end of the saving period. The Withdrawal Amount equals this figure, because qualified Roth distributions are not taxed. The Total Interest Earned is the difference between the future value and your total contributions — a useful measure of how much of your retirement income comes from growth rather than savings.

Keep in mind that the results are in nominal dollars. Over 30 years, inflation will reduce the purchasing power of the projected balance. If you want to translate the final figure into a monthly retirement income stream, or to model multiple accounts together, use the Retirement Planner.

Assumptions and Limitations

Contributions are annual, not monthly. The formula assumes one deposit per year at the end of each year. If you contribute monthly, your actual balance will be slightly higher; the Monthly Investment Savings calculator models that case.
Constant return rate. Real markets fluctuate; 5–7% is a common long-run assumption for a diversified stock portfolio, but actual year-to-year results will differ.
Contribution limits are ignored. The IRS caps annual Roth IRA contributions (with catch-up contributions allowed from age 50) and phases out eligibility at higher incomes. Check the current limits before relying on the projection.
Tax rate is informational. It does not change the calculation. A higher current tax rate is the main argument for a Traditional IRA instead; a lower expected rate in retirement favors the Roth.
Withdrawals must be qualified. Tax-free treatment requires the account to be at least 5 years old and the owner to be 59½ or older (with exceptions such as a first-home purchase or disability). Early withdrawals of earnings may face taxes and a 10% penalty.

For a quick reality check on whether your expected return is realistic for your risk tolerance, the Return on Investment calculator can help you evaluate historical or projected performance.

Frequently Asked Questions

How do I calculate Roth IRA growth by hand?

Use the future value of an annuity formula: $FV = P \times \frac{(1 + r)^n - 1}{r}$, where $P$ is your yearly contribution, $r$ the return as a decimal, and $n$ the years. For example, $7,000 per year at 6% for 20 years gives $7{,}000 \times \frac{(1.06)^{20} - 1}{0.06} \approx 257{,}593$ dollars. Subtract $P \times n$ from the result to see how much came from growth.

What is a realistic expected annual return for a Roth IRA?

A Roth IRA is just a container — the return depends on what you invest in. Historically, a diversified stock-heavy portfolio has averaged roughly 7% per year before inflation over long periods, while bond-heavy portfolios run lower. Many planners use 5–7% for long projections to stay conservative. The calculator assumes a constant average, but real returns swing widely year to year.

Does the calculator account for IRS contribution limits?

No. The IRS caps annual Roth IRA contributions (for example, $6,500 in 2023, plus an extra catch-up amount if you are 50 or older), and the limit changes over time. If you enter more than the legal limit, the projection shows a balance you cannot actually reach through IRA contributions alone — you would need a taxable account or employer plan to save the difference.

Why is my projected balance different if I contribute monthly?

The formula assumes one deposit at the end of each year. If you spread the same total across 12 monthly deposits, part of your money is invested earlier and compounds longer, so your real balance ends up slightly higher — roughly by half a year of growth. For example, monthly deposits add roughly 3–4% extra at 7% over 30 years.

What happens if I withdraw Roth IRA money before age 59½?

You can always withdraw your own contributions tax- and penalty-free at any time. Earnings are different: withdrawing them early generally triggers income tax plus a 10% penalty unless an exception applies (first home purchase up to $10,000, disability, qualified education, or a substantially equal periodic payment arrangement). The 5-year rule also applies to qualified status.

How does inflation affect my projected Roth IRA balance?

The result is in nominal dollars, so a $500,000 balance in 30 years buys less than $500,000 today. At 3% average inflation, purchasing power roughly halves every 24 years — divide the projected balance by $(1 + i)^n$, where $i$ is the inflation rate, to convert it to today's dollars. For example, $500,000 in 30 years at 3% inflation equals about $206,000 in current purchasing power.

Are Roth IRAs subject to required minimum distributions (RMDs)?

No — during the owner's lifetime, Roth IRAs are exempt from required minimum distributions, so the money can keep compounding indefinitely and be passed to heirs. This makes a Roth IRA a useful estate-planning tool. Note that beneficiaries who inherit a Roth IRA generally must withdraw the full balance within 10 years, though inherited funds usually remain tax-free.