The formula
How it works
Project how a traditional IRA grows from your current balance and yearly contributions. With tax-deferred growth and decades of compounding, steady contributions can build a substantial retirement pot.
FAQ
How much can I contribute to an IRA?
Contribution limits are set each year — recently around $7,000, with an extra catch-up amount if you are 50 or older. The calculator lets you enter any figure, but check the current annual limit before you contribute.
What does “tax-deferred” mean?
In a traditional IRA you usually get a tax break on contributions and pay no tax on the growth until you withdraw in retirement. That lets more money compound now, though withdrawals are taxed later.
What is the difference between a Traditional and a Roth IRA?
A traditional IRA typically gives you a tax deduction on contributions now and taxes withdrawals in retirement, while a Roth IRA is funded with after-tax money and qualified withdrawals are tax-free. Which is better depends on whether you expect your tax rate to be higher now or in retirement.
When can I withdraw from an IRA without a penalty?
Withdrawals from a traditional IRA before age 59½ generally trigger a 10% early withdrawal penalty on top of ordinary income tax, with some exceptions. After that age, withdrawals are taxed as ordinary income but the penalty no longer applies.
Does an IRA have required minimum distributions?
Traditional IRAs require you to start taking minimum distributions once you reach a certain age, forcing some of the tax-deferred balance to be withdrawn and taxed. Roth IRAs are not subject to this requirement during the original owner’s lifetime.
How does the annual return assumption affect the projection?
The rate you enter compounds every year alongside your contributions, so even a modest change — say 6% versus 8% — can shift the final balance by a large margin over 20 or 30 years. Actual investment returns vary year to year, so treat the result as an estimate, not a guarantee.
Can I contribute to an IRA if I also have a 401(k)?
Yes, you can generally contribute to both, though your IRA contribution may not be fully tax-deductible if you or a spouse is covered by a workplace plan and your income is above certain thresholds. Contributing to both lets you save more toward retirement each year.
About the IRA calculator
This calculator projects the future value of a traditional Individual Retirement Account (IRA) from your current balance and the amount you add each year. An IRA is a tax-advantaged way to save for retirement: contributions may be tax-deductible and the investments grow tax-deferred until you withdraw them. Seeing the projected balance shows how powerful regular contributions become when they compound over decades.
How to use it
Enter your current IRA balance, the amount you plan to contribute each year, the annual return you expect, and how many years until you retire. The calculator shows the projected balance, split into your total contributions and the investment growth on top. For example, $10,000 plus $7,000 a year at 7% for 30 years grows to well over $700,000 — most of it growth rather than what you paid in.
The formula
The balance combines the growth of your current savings and your yearly contributions: , where is the current balance, is the annual contribution, is the annual return and is the number of years. Because a traditional IRA is tax-deferred, the full amount compounds without yearly tax drag, which the return figure represents.
Where it is used
Savers use it to plan retirement contributions and to see the long-term reward of investing consistently within a tax-advantaged account. It helps compare a traditional IRA with a Roth or a 401(k), and to decide how much to contribute each year toward a target. Because IRAs run for decades, small differences in contribution or return compound into large differences in the final balance.