💰 Financial
IRA Calculator
Estimate the future value of a Traditional IRA. Calculate how your tax-deductible contributions grow tax-deferred until you make withdrawals in retirement.
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Formula
FV = P(1+r)^t + PMT × [((1+r)^t - 1) / r]FV- Future balance (Pre-Tax)
P- Current IRA balance
PMT- Annual contribution amount
r- Annual expected return
t- Years until retirement
Example
Traditional IRA Growth
Contributing $5,000 annually for 30 years at a 6% return.
- Total contributions: $5,000 × 30 years = $150,000.
- Tax-deferred growth: $245,290.
- Result: The final balance is $395,290. You will pay regular income tax on this money as you withdraw it in retirement.
Frequently Asked Questions
If you expect your tax rate to be lower in retirement than it is today, a Traditional IRA usually makes mathematical sense. If you expect your tax rate to be higher in retirement, a Roth IRA is generally better.
It means you do not pay taxes on the money when you earn it (you get a tax deduction now), and you do not pay taxes on the dividends or capital gains while the money grows. You only pay taxes when you withdraw the money in retirement.