IRA Calculator
IRA Calculator
An Individual Retirement Account (IRA) is a key retirement savings tool that offers unique tax benefits. Traditional IRAs allow pre-tax contributions that grow tax-deferred, providing a significant advantage for your retirement savings.
Use our IRA calculator to see how different contributions and tax rates can impact your retirement savings. For comparison purposes, contributions and earnings in regular taxable brokerage accounts will be converted to after-tax values, helping you make informed decisions based on your financial goals and tax situation.
*Using this free calculator is for informational and illustrative purposes only. The estimated balance shown above represents your IRA balance at retirement before taxes are applied. Remember, withdrawals from Traditional IRAs are taxable based on your personal tax rate at the time of withdrawal.
Calculator Definitions
Before you use this IRA calculator, you’ll need to understand the various metrics involved in order to plug in the correct numbers. These are the terms to know when using the IRA calculator.
• Current Age: This is the age you are now.
• Planned Retirement Age: The age you plan to retire. It’s important to be aware that age 59 ½ is when you can begin to make withdrawals from an IRA without incurring penalties.
• Current IRA Balance: This refers to the current balance of all your retirement savings accounts. If you’ve just opened an account and the balance is $0, enter $0.
• Annual Contributions: The annual contribution is the amount of pre-tax dollars you intend to contribute to your IRAs each year. For tax year 2024, you can contribute up to $7,000 ($8,000 if you’re 50 or older).
• Assumed Annual Return: The expected rate of return is the amount an investor anticipates earning (or losing) over a certain period of time. The amount is expressed as a percentage and is usually based on data such as past performance of a stock or an index, such as the S&P 500.
A good rate of return on investments is generally considered to be about 7%, which is the average annual return on the S&P 500 adjusted for inflation. However, your actual return depends on the investments you make, inclusive of any investment and account fees. Since an actual rate of return can’t be guaranteed, an expected rate of return is speculative.
How Does This IRA Calculator Work?
To use this IRA calculator, fill in the appropriate numbers and information required. This includes the starting balance across all IRAs, your current age, the annual contribution amount in pre-tax dollars, the age at which you expect to retire, and your estimated rate of return on the investments in the account.
Calculator assumptions:
• If you are under age 50, it does not include catch-up contributions.
• It does not account for inflation.
• Your current tax rate is also used as your tax rate in retirement.
• The estimated account balance does not factor in dividends, uses a fixed rate of return across the selected time period, and assumes all investment growth is from capital appreciation.
The number provided by the calculator is an estimate. The actual amount of your final nest egg depends on a range of factors, including: the investments you choose for your IRAs, the market conditions over time (e.g. the risk of volatility or loss), investment fees, and costs.
Recommended: Check out our IRA Contribution Calculator to easily see how much you can contribute based on your personal situation.
FAQ
How much would $10,000 in a Traditional IRA be worth in 20 years?
How much $10,000 in a Traditional IRA would be worth in 20 years depends on such factors as what you invest in, and how much you contribute additionally each year. As a hypothetical, if you start with a $10,000 deposit and contribute an additional $5,000 per year with a 7% rate of return (the average annual return of the S&P 500, adjusted for inflation), your Traditional IRA could potentially be worth about $243,000 in 20 years.
Can I put $20,000 into a Traditional IRA?
You can contribute up to $20,000 to a Traditional IRA by rolling over funds from an employer-sponsored retirement plan, such as a 401(k) or 403(b). It’s important to note that rollovers do not count toward your annual IRA contribution limits.
Ready to invest for your retirement?
It’s easy to get started when you open an IRA online with SoFi.
SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
