What Is the Traditional IRA Calculator?
This calculator applies to United States Traditional IRAs. It estimates how much your retirement account could grow over time given your current balance, ongoing monthly contributions, and an expected annual rate of return. A Traditional IRA lets eligible US savers make pre-tax (potentially tax-deductible) contributions that grow tax-deferred until withdrawal. Note: this tool projects investment growth only — it does not account for IRS contribution limits, taxes on withdrawal, or required minimum distributions, and assumes contributions stay constant.
How to Use It
Enter your current IRA balance, the amount you plan to contribute each month, your expected average annual return (for example 7% for a diversified portfolio), and how many years until you tap the account. The calculator compounds your balance monthly and adds your contributions, then shows your projected balance along with how much came from contributions versus investment growth.
The Formula Explained
The projected balance combines two parts: the growth of your existing balance and the growth of a stream of monthly deposits (an annuity).
$$FV = P\cdot\left(1 + \frac{r}{12}\right)^{12t} + PMT\cdot\frac{\left(1 + \frac{r}{12}\right)^{12t} - 1}{\frac{r}{12}}$$
Here \(P\) is your starting balance, \(PMT\) is each monthly contribution, \(r\) is the annual return as a decimal, and \(t\) is the number of years. The monthly rate is \(r/12\) and the total number of compounding periods is \(12t\).
Worked Example
Suppose you start with $10,000, add $500 per month, expect a 7% annual return, and invest for 30 years. The monthly rate is \(0.0058333\) and there are 360 periods. Growth factor \((1.0058333)^{360} \approx 8.1165\). The starting balance grows to about $81,165, and the contributions grow to roughly $609,985, for a projected balance near $691,150 — of which $190,000 was contributed and about $501,150 was investment growth.
FAQ
Does this account for IRS contribution limits? No. For 2024 the Traditional IRA limit is $7,000 ($8,000 if age 50+). Keep your monthly amount within those limits to stay compliant.
Is the growth tax-free? Traditional IRA growth is tax-deferred, not tax-free. Withdrawals in retirement are generally taxed as ordinary income.
What return rate should I use? A long-term stock-and-bond portfolio has historically returned roughly 6–8% before inflation. Use a conservative estimate to avoid overstating results.
