See how your Roth IRA can grow tax-free over time.
Your total Roth IRA value across all Roth accounts.
Max $7,000 in 2026 ($8,000 if 50+). All growth is tax-free.
Historical average: 8-10% for stock index funds. Use 8% for conservative estimates.
How many years until you plan to start withdrawing.
See your projected tax-free retirement balance and growth breakdown.
Where FV = future value (all tax-free), PV = current balance, C = annual contribution, r = annual return rate, n = years.
Starting to invest at 25 vs 35 can mean 2x more retirement savings due to compound interest.
Always maximize your employer 401(k) match — it's essentially free money you're leaving on the table.
Roth IRA: contribute after-tax money, grows tax-free, withdrawals in retirement are tax-free. Traditional IRA: contribute pre-tax money (tax deduction now), grows tax-deferred, withdrawals in retirement are taxed as income. Key difference: with Roth, you pay taxes now at your current rate; with Traditional, you pay taxes later at your future rate. Roth is typically better for younger workers in lower tax brackets.
The 2026 Roth IRA contribution limit is $7,000 (under 50) or $8,000 (50+ with catch-up). Income limits for full contributions: Single filers under ~$161,000 MAGI, Married filing jointly under ~$240,000 MAGI. Above these limits, contributions are phased out. If you're over the income limit, consider a Backdoor Roth IRA — contribute to a Traditional IRA then convert to Roth.
Your contributions (not earnings) can be withdrawn anytime, tax-free and penalty-free — this makes Roth IRA a flexible savings vehicle. Earnings can be withdrawn tax- and penalty-free after age 59½ AND the account has been open 5+ years. Before that, earnings withdrawals face 10% penalty + income tax, with exceptions for first home purchase ($10,000 lifetime), disability, and qualified education expenses.
Contributing the max $7,000/year starting at age 25 at 8% average return: By 35 = $109,000. By 45 = $340,000. By 55 = $855,000. By 65 = $2,015,000 — all tax-free in retirement. Even $200/month ($2,400/year) from age 25 grows to $690,000 by 65. The earlier you start, the more powerful the tax-free compounding becomes.
Use both if possible. Roth 401(k) has higher limits ($23,500 vs $7,000) and may have employer match, but has fewer investment options and required minimum distributions (RMDs) at 73. Roth IRA has more investment flexibility, no RMDs ever, and allows early withdrawal of contributions. Optimal strategy: max employer match in Roth 401(k), then max Roth IRA, then go back to Roth 401(k).