IRA Calculator

The IRA calculator tool will project the potential value of an individual retirement account (IRA) at retirement and show you what is available to spend after taxes are paid. It allows for a comparison between traditional, SEP or SIMPLE IRAs, Roth IRAs and regular investment accounts to see which tax treatment leaves more money in your hands.

What is an IRA?

An IRA (Individual Retirement Account) is a retirement savings account that offers tax benefits under U.S. tax laws. Its purpose is to encourage people to save for their retirement. Annual contributions grow through interest, dividends and capital gains, and the tax rules determine what portion of this growth can actually be kept.

The most common types are traditional IRAs and Roth IRAs. A traditional IRA allows contributions to generally be tax-deductible in the current year but withdrawals in retirement are subject to income tax. A Roth IRA is funded with after-tax dollars, so qualified withdrawals are tax-free. SEP and SIMPLE IRAs are designed for self-employed individuals and small businesses, and they operate similarly to a traditional IRA with similar tax treatment.

How to use this calculator:

Primarily select the type of account you want to check and enter your age, expected retirement age, current account balance, annual contribution amount. Set the expected rate of return, current tax rate and expected retirement tax rate.

The header area shows the after-tax balance and the tool always calculates three options side-by-side so you can compare them. If you turn on "Inflation," you'll see results in today's dollars, if you turn on "Increase Contributions" you can increase your contributions to match rising annual income.

Forecast calculation method:

Every year, the account balance increases by the interest rate and the amount of that year's payment is added. Under the conditions of an initial balance (PV), annual payments (PMT), interest rate (r) and a term of n years, the account grows as follows:

The tax treatment leads to differences depending on account type.

With traditional IRAs, SEP or SIMPLE IRAs the entire taxable account balance grows and at retirement all of the money is taxed as a lump sum using your then-current tax rate. With a Roth IRA the contributions have already been taxed so the starting balance is lower but withdrawals are tax-free. With a taxable account the taxable amount is used and part of the annual earnings will also be taxed, which slows growth through compounding interest.

Example calculation

A person with 30 years has already saved $30,000 and pays in additional $7,500 annually, assuming a 6 percent expected return. If this person retires at age 65, current tax rates of 25 percent and pension tax of 15 percent are assumed. The account is expected to grow to about $1,066,343 before taxes. Here's a comparison of the three options after taxes:

In this example the traditional IRA is more advantageous because the person assumes that their tax rate will be lower in retirement than during their working years which makes it beneficial to defer taxes. The ending balance of both IRAs far exceeds the taxable account, and with a taxable account the earnings are taxed every year reducing the balance by over $200,000.

Which is better, a traditional or Roth IRA?

It is important to compare your current tax bracket with the expected tax bracket in retirement. If you expect to be in a lower tax bracket in retirement, then a traditional IRA will generally be more advantageous. You can take deductions during a period of higher taxes and pay later at a time when taxes are lower. However, if you expect to be in a higher tax bracket in the future, then a Roth IRA is more advantageous. This is because you lock in the current low tax rates and never have to pay taxes on earnings.

If the two tax rates are equal, then the after-tax results will also be equal. Which option to choose depends on other factors. A Roth IRA does not require mandatory lifetime distributions and allows for tax-free growth of earnings. On the other hand, a traditional IRA can reduce current taxable income.

Contribution limits

The IRS sets a maximum amount that can be contributed each year. As of 2026, and according to the published information, the standard contribution limits for traditional IRAs and Roth IRAs will increase from $7,500 to $8,600 (for those aged 50 or older). For Roth IRAs, there is a phase-out if income exceeds certain levels. SEP-IRAs and SIMPLE-IRAs can have much higher contributions. As the limits change annually, you should check current limits for your situation using these as guidelines before planning.

Tips for making predictions more realistic:

Use realistic returns instead of idealized scenarios. Over the long term, a broadly diversified stock index fund will average an annual return (before inflation) of about 6 percent to 10 percent. These can be reasonable goals to shoot for. Retirement tax rates are critical in deciding between a traditional IRA and Roth IRA, so make sure you have realistic estimates. Also, use the inflation-adjusted option when doing long-term calculations because $1 million will buy much less than it does today in 35 years.

This calculator is for educational and planning purposes only and does not constitute financial or tax advice. Tax laws, contribution limits, and income phase-out rules are subject to change and depend on individual circumstances. Returns are not guaranteed. Consult a qualified professional before making any retirement-related decisions.