Project the tax-free balance of a Roth IRA from your contributions and expected return.
$967,658.15
Total contributed
$245,000.00
Tax-free growth
$722,658.15
Contributions
$245,000.00
25.3%Tax-free growth
$722,658.15
74.7%| Projected balance | $0.00 | $7,000.00 | $14,490.00 | $22,504.30 | $31,079.60 | $40,255.17 | $50,073.04 | $60,578.15 | $71,818.62 | $83,845.92 | $96,715.14 | $110,485.20 | $125,219.16 | $140,984.50 | $157,853.42 | $175,903.15 | $195,216.37 | $215,881.52 | $237,993.23 | $261,652.75 | $286,968.45 | $314,056.24 | $343,040.17 | $374,052.99 | $407,236.70 | $442,743.26 | $480,735.29 | $521,386.76 | $564,883.84 | $611,425.70 | $661,225.50 | $714,511.29 | $771,527.08 | $832,533.98 | $897,811.35 | $967,658.15 |
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A Roth IRA is a retirement account where your money grows tax-free, and—unlike traditional IRAs or 401(k)s—you owe no taxes on withdrawals in retirement. You contribute after-tax dollars (no deduction now), but decades of compounding inside the account produce earnings that are completely tax-free when you reach 59½. This is the opposite of a traditional IRA, where contributions are deductible upfront but withdrawals are taxed. The IRS imposes annual contribution limits to manage tax expenditure; these limits are adjusted periodically for inflation, and they are higher for individuals age 50 and older (a catch-up provision). Because Roth contributions are after-tax, you have flexibility that traditional accounts don't: you can withdraw your contributed basis without penalty or tax (though earnings are locked until retirement). This calculator projects how much your Roth will grow over time, showing the split between what you contribute and what investment returns generate—so you can visualize the tax-free compounding in action.
Starting at age 30 with $0 balance, you contribute $7,000 per year to your Roth and expect a 7% annual return (a long-term stock market average). Over 35 years to age 65, you will have contributed a total of $245,000. But the power of compounding means your account grows to about $967,658—that's nearly $722,658 in tax-free growth. Every dollar of that growth is yours to withdraw tax-free in retirement.
Now imagine you wait until age 40 to start the same plan: contribute $7,000 per year at 7% return until 65. You contribute $175,000 over 25 years and end up with about $442,743—still meaningful growth, but the 10-year delay cost you roughly $525,000 in potential balance compared to starting at 30. This is why starting early, even with smaller contributions, can matter more than catching up later. If you're 50 or older, the IRS allows higher annual contributions (called a catch-up) to help offset that gap.
What is the Roth IRA contribution limit?
The IRS sets an annual contribution limit for Roth IRAs, which is adjusted periodically to account for inflation. Individuals age 50 and older are eligible for a higher catch-up contribution. Because these limits change year to year, you should verify the current year's limit on IRS.gov or consult a tax professional. This calculator's default reflects a typical annual contribution, but always check the IRS website for the exact limit that applies to you.
How is a Roth IRA taxed?
A Roth IRA has a unique tax structure: you pay income tax on the money you contribute (it's after-tax), but all earnings and gains inside the account are tax-free, and withdrawals in retirement (after age 59½ and after opening the account for at least 5 years) are also tax-free. This is the opposite of a traditional IRA, where contributions may be deductible upfront but both the original contributions and all earnings are taxed as ordinary income when you withdraw them. Over decades, this tax-free growth compounds into significant savings.
Roth IRA vs. traditional IRA—which is better?
It depends on your current and expected future tax brackets. A traditional IRA may be better if you expect to be in a lower tax bracket in retirement or if you want to reduce your taxable income this year. A Roth may be better if you expect to be in a higher tax bracket later, or if you want the certainty of tax-free withdrawals and no required distributions in retirement (Roth IRAs have no required minimum distributions at any age). A Roth also offers better flexibility: you can withdraw contributions (but not earnings) penalty-free before retirement. Many people benefit from a mix of both. Consult a tax advisor or financial planner to decide which account structure best fits your plan.