Roth IRA Calculator
Roth IRA Overview
Roth IRA Calculator Values
The following instruction will demonstrate how to properly use the Roth IRA calculator to calculate one’s yearly contribution, yearly withdrawal amount, and total value at retirement. Visible are current values that can be changed
- Return on Investment During Contribution
- Yearly Contribution
- Years of Contribution
- Years of Withdrawals
- Yearly Rate of Return
These are the values one would input into the calculator in order to receive the following retirement metrics:
- Yearly Contribution
- Value at Retirement
- Yearly Withdrawal
- Tax on Withdrawal
- Take Home Amount on Yearly Basis
How to Use a Roth IRA Calculator
Tax Bracket Percentage
The first objective is to input the tax bracket percentage during the years of contribution. This value is a percentage calculated based on an individual’s earning level and filing status. Taxfoundation.org is a beneficial resource that can assist with finding this information. Understanding tax percentage in terms of the Roth IRA calculator is helpful in calculating the amount that can be taken from the overall take-home annual amount. Because Roth IRAs are taxed during contribution, one would not have to worry about taxes during withdrawal (retirement) as one would with a traditional IRA.
Contribution and Withdrawal
The next step involves understanding what a comfortable yearly contribution amount would look like that also coincides with the set financial budget for the year and the following years of arranged contribution. One could do this by inputting the estimated amount of years left from now to retirement. This way, one can keep saving and investing up until the year they quit working, alleviating enough money to have a successful financial future.
Afterward, one can calculate the years of withdrawal. This should be an estimate consisting of the total number of years one believes to have during retirement. Typically, saving 30 years of withdrawals is ideal to ensure that funds do not run out ahead of time. A good piece of information to keep in mind is that often funds could also be passed down to family and relatives.
Yearly Rate of Return
After completing all the steps and entering the final input, click submit to receive the calculation result. The first input one would see is the yearly contribution. The annual contribution amount is linked and copied from the initial input to illustrate the contribution value compared to the overall calculated value at retirement, which is the subsequent output. From there, an individual can understand, based on calculations, how much one can withdraw each year. Because this is a Roth IRA, one will only be taxed pre-retirement and not upon withdrawal (retirement) as one would with a Traditional IRA.
This calculator is the perfect tool to determine the required yearly contribution needed to achieve the desired yearly withdrawal amount. Check out the Traditional IRA calculator to compare the two investment vehicles and see which suits investment needs better.