Online Roth IRA calculators can be an extremely valuable resource.
If you don’t have access to a hand-held financial calculator where you can plug in net present value, number of years to retirement, and the expected annual interest rate in order to calculate the future value of your holdings, then online retirement calculators will essentially perform the same function.
However, keep in mind that these calculators are beneficial as a general guide, not as an authoritative source. Any number of variables will factor into your retirement planning and your specific investment strategy.
However, these Roth IRA calculators can provide you with ballpark estimates for any number of questions, such as the annual compounded rate of return you need to generate in order to reach retirement with a predetermined amount of money saved…
Or how much you need to contribute on an annual basis in order to meet your financial goals. With these questions in mind, playing around with a financial calculator can be of great benefit in meeting and exceeding your retirement goals.
Projecting Your Roth IRA Savings
The two calculators below will assist you in determining the parameters of your savings plan. Hopefully, they can assist you in answering the following questions:
How much do I need to contribute on an annual basis?
What sort of annual rate of return do I need to receive?
How much of an added benefit will an extra year of contributions provide?
Dinkytown.Net Roth IRA Savings Calculator
This is an excellent calculator which allows you to enter the current balance of your account (if you already have an account), your current age, your expected retirement age, your expected rate of return, and your expected annual contributions. When you hit “Calculate,” it generates a graph projecting your future retirement savings.
You can also enter your expected marginal tax rate so that the calculator can show you the projected value of the same amount of money invested outside of a Roth. This provides a vivid illustration of the tremendous benefits of a Roth IRA versus non-tax exempt alternatives.
PlanningTips.Com Roth IRA Calculator
The PlanningTips calculator offers many of the same benefits as the one above. However, it also offers a few more variables. You can input your expected rate of return prior to retirement as well as after retirement. You can also input an expected rate of inflation as well as your current income tax bracket and expected income tax bracket in retirement.
When you hit “Calculate,” it provides you with graphs and charts outlining your expected results for a Roth, a traditional IRA, and a regular taxable savings account. Again, this should provide a clear and visual illustration of the immense benefits of investing your retirement savings in a Roth.
Roth vs. Traditional IRA
The calculators listed below offer many of the same functions as the two above, while specifically focusing on what’s best for your individual financial situation – a traditional IRA or a Roth IRA. However, keep in mind, the law doesn’t prohibit a person from having a traditional IRA and a Roth IRA. Just remember the same annual contribution limit applies across both accounts. So if your limit is $5,000 per year, that limit applies to both a Traditional and a Roth IRA simultaneously, meaning you can NOT put $5,000 in both, but only $5,000 between the two.
So using the calculators below can prove valuable in determining how to allocate your IRA contributions…
MSN Money Roth Calculator
The MSN Money calculator offers a bit more than the standard calculators featured above. It asks the same standard questions, but probes further into your individual financial situation, asking a series of questions regarding such topics as your tax filing status, whether or not you have a tax plan at work, your current income information, state taxes, and other pertinent information. When you reach the final screen, the calculator gives you an overall future value figure for your Roth IRA as well as the expected dollar amount of your annual withdrawals (before and after inflation). This can be especially beneficial for helping you determine your current financial goals by giving you an annual dollar figure to shoot for.
MoneyChimp.Com Roth IRA Comparison Calculator
The MoneyChimp calculator takes into account your current IRA balance (if any), your expected retirement date, the number of years you expect to be retired, and your current tax rate as well as your expected tax rate following retirement. When you hit “Calculate,” it provides you with an after-tax dollar figure you can expect to withdraw from either a Roth or a traditional IRA. However, keep in mind what we said earlier – future rates can be expected to be much higher, skewing the returns you’ll receive on a traditional IRA which is taxable upon withdrawal.
Online Roth IRA calculators can be an extremely valuable resource.
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