Roth IRA Calculator: How Tax-Free Growth Builds Your Retirement

Adjust your age, income, and contributions below to see how a Roth IRA could grow compared to a regular taxable account.

Kevin started contributing to a Roth IRA at 26, the year he landed his first real engineering job. He put in $3,000 a year — not the maximum, just what he could afford after rent and student loans. At 34, he bumped it up to $5,000. By 40, he was maxing out at $7,000.

When Kevin ran the numbers at 42, his Roth balance had crossed $200,000. He'd contributed about $95,000 total. The rest — over $105,000 — was pure growth. Tax-free growth. No taxes on the dividends along the way, no taxes when he'd eventually withdraw it, no government forcing him to take it out at any particular age.

His coworker Nate had invested the same amounts over the same period, but in a regular brokerage account. Nate's balance: around $175,000. Same contributions, same funds, same returns. The difference was taxes — dividends taxed every April, capital gains taxed whenever he rebalanced. That silent drag added up to roughly $25,000 less by their early forties, and the gap was accelerating.

"I didn't even notice the tax thing for years," Nate admitted. "It's not like they send you a bill that says 'here's what you lost to tax drag.' It just quietly eats away at your balance."

That quiet erosion is exactly what the calculator above measures.

Why the same investments grow differently

A Roth IRA and a taxable brokerage account can hold identical funds. Same index fund, same dividend yield, same annual return. But after 20 or 30 years, the Roth will hold substantially more money.

The reason is something financial planners call tax drag — the annual cost of owing taxes on investment income inside a taxable account. Every year, dividends get taxed. Every time you rebalance or sell a position, capital gains get taxed. Even if you reinvest everything, the IRS takes a slice before it can compound.

At a 22% marginal rate, a fund yielding 2% in dividends loses almost half a percentage point to taxes annually. That sounds small. But compounded over 30 years on a growing balance, it pulls the ending number down by tens of thousands of dollars. It's like running a race with a small weight strapped to your ankle — barely noticeable at the start, but by mile 20, you feel every ounce.

Inside a Roth IRA, nothing is taxed. Dividends reinvest in full. You can rebalance without triggering a taxable event. And when you finally withdraw the money in retirement, every dollar comes out tax-free. The calculator above shows this gap in real numbers for your specific situation.

Who can contribute (and how much)

The IRS puts two guardrails on Roth IRA contributions: a dollar cap and an income ceiling.

For 2025, the annual limit is $7,000 if you're under 50 and $8,000 if you're 50 or older. That limit covers all your IRA contributions combined — Traditional and Roth together. If you put $3,000 into a Traditional IRA, you can only contribute $4,000 to a Roth that same year.

Income phase-outs determine whether you can contribute at all. Single filers start losing eligibility at $150,000 of modified adjusted gross income, and the ability to contribute disappears entirely above $165,000. For married couples filing jointly, the phase-out range runs from $236,000 to $246,000. Married individuals filing separately face a much narrower window — $0 to $10,000 — which effectively shuts out most filers in that category.

If your income exceeds the limit, you're not out of options. A backdoor Roth IRA lets you contribute to a Traditional IRA (no income limit for nondeductible contributions) and then convert it to Roth. Be aware that the pro-rata rule can complicate this if you hold other pre-tax IRA balances.

Why starting early changes everything

Compound growth is not a straight line — it's an exponential curve, slow and flat at first, then steep at the end. The first $7,000 you contribute at 25 is worth far more than the $7,000 you contribute at 55, simply because it has three additional decades to grow.

Picture two people. Amanda opens a Roth IRA at 25 and contributes $7,000 every year until she's 65. At a 7% average return, she ends up with roughly $1.5 million. Her total contributions: $280,000. The rest is compounding.

Her sister Rachel waits until 40 to start. She also contributes $7,000 a year until 65 — but she only has 25 years instead of 40. Her balance at 65: about $475,000. Rachel contributed $175,000, so she still did well. But Amanda's 15 extra years of compounding generated over a million dollars more.

Those extra years at the front end are irreplaceable. You can increase contributions later, but you can never buy back the compounding time you missed. Try adjusting the starting age in the calculator above to see this effect with your own numbers.

Roth or Traditional — how do you choose?

The question most people ask — Roth or Traditional? — comes down to tax rates now versus tax rates later.

A Traditional IRA gives you a tax deduction today. You contribute pre-tax dollars, your taxable income drops, and you owe less to the IRS this year. The trade-off: every dollar you withdraw in retirement gets taxed as ordinary income, and you must start taking required minimum distributions at age 73 whether you need the money or not.

A Roth IRA offers no deduction today. You contribute after-tax dollars. But the account grows tax-free, withdrawals in retirement are tax-free, and there are no RMDs during your lifetime.

If your tax rate stays the same now and later, both accounts produce identical after-tax results. The advantage shifts to Roth when you expect higher rates in retirement — from larger account balances, more income sources, or future changes to the tax code.

For most people in their twenties and thirties earning moderate incomes, Roth makes sense. You're likely in a lower bracket now than you will be at the peak of your career or during retirement with accumulated savings. Locking in today's lower rate is the smart move.

For high earners currently in the 32% or 35% bracket, a Traditional IRA or Traditional 401(k) may save more in taxes now. But if you believe rates will rise — and many tax experts expect they will after 2025's TCJA provisions expire — even high earners may prefer the certainty of Roth's tax-free withdrawals.

What maxing out actually looks like

Maxing out a Roth IRA every year is one of the simplest retirement strategies available, and one of the most powerful.

A 30-year-old who contributes the full $7,000 annually at a 7% return accumulates roughly $740,000 by age 65. After turning 50 and switching to the $8,000 catch-up limit, the total grows to approximately $830,000. That is $830,000 in tax-free money — no required distributions, no taxes on withdrawal, complete flexibility on when and how you use it.

Toggle "Maximize contributions" in the calculator to see what this looks like for your situation. The calculator adjusts for the catch-up contribution automatically once your age crosses 50.

Even if you can't max out every year, consistency matters more than the exact amount. Contributing $3,000 a year without fail beats contributing $7,000 some years and nothing in others. The years you skip are years of lost compounding that can never be recovered. Think of it less like saving and more like planting — every year you miss is a tree that never gets to grow.

Benefits that don't show up on the chart

A Roth IRA offers structural advantages that the growth projection above can't capture.

No required minimum distributions means you're never forced to withdraw money you don't need. A Traditional IRA mandates distributions starting at 73, whether you want the income or not — and those distributions are taxable, potentially pushing you into a higher bracket. A Roth IRA can sit untouched for decades, compounding tax-free for as long as you live.

Penalty-free access to contributions makes a Roth IRA more flexible than other retirement accounts. If you've contributed $50,000 over the years, you can pull out up to $50,000 at any time, for any reason, with no tax or penalty. You shouldn't dip into retirement savings if you can avoid it — but knowing the option exists provides genuine peace of mind during emergencies.

Tax-free inheritance simplifies estate planning for your heirs. Beneficiaries who inherit a Roth IRA must withdraw the money within 10 years, but those withdrawals are entirely tax-free. Inheriting a Traditional IRA means 10 years of taxable distributions — which can push heirs into higher brackets during their peak earning years.

These structural benefits are why many financial planners recommend filling a Roth IRA first, even when the immediate tax math is close to a wash.

Want a personalized Roth IRA strategy that fits your full retirement picture? Connect with a retirement advisor who can help you optimize contributions, conversions, and withdrawals across all your accounts.