Traditional IRA Overview
Traditional IRA Calculator Values
The following instruction will demonstrate how to properly use the traditional 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 Retirement
- 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 Traditional IRA Calculator
Tax Bracket Percentage
Contribution and Withdrawal
Next, input a comfortable yearly contribution amount that fits in with the financial budget set for the year as well as the years of planned contribution. One should input roughly the amount of years left from the current year all the way to retirement. This way one is able to save and invest all the way up until the year they leave the workforce setting themselves up for a secure and successful financial future.
After, input the years of withdrawal into the calculator. This should be an estimate of the number of years one expects to have during retirement. A good rule of thumb is to set aside roughly 30 years of withdrawals to make sure that funds do not run out ahead of time and that some funds could also be passed down to relatives and next of kin.
Yearly Rate of Return
After the final input has been entered, click submit to receive the calculation result. First, one would see the yearly contribution copied and linked from the initial input to demonstrate the value of contribution compared to the overall value at retirement. The value at retirement is the following input that exhibits the full balance at retirement. From there an individual can see how much they are able to withdraw per year as well as the amount they are taxed on withdrawal. Because this is a traditional IRA, one will be taxed at retirement, while a Roth IRA would not have this tax. Lastly, the yearly withdrawal is subtracted from the tax on that withdrawal to achieve the final yearly take-home amount that individuals would receive following this investment plan.
This calculator is the perfect tool to determine the required yearly contribution needed to achieve the desired yearly withdrawal amount. Check out the Roth IRA calculator to compare the two investment vehicles and see which suits investment needs better.