To Visit The Roth IRA Savings Calculator Click Here
If you are reading this you probably already know that using a Roth IRA can save you a ton of money over a long period of time. Once you deposit money into your Roth IRA account it’s able to grow steadily without a tax penalty when you’re ready to withdraw. That savings is what this calculator helps you figure out.
The inputs are pretty clear, but I’ll try to help explain two things that trip people up sometimes. First of all lets look at how to estimate your yearly return. Obviously the types of investment you use is the main factor here, but how do you accurately estimate for this? The short answer is it’s very difficult to predict your return down to a percentage point or two. I would advise playing around somewhere between 5-10%. 5% can be used as a worst-case scenario, and the 10% can be looked at as a high end estimate. If you really want to nail it down, you’ll have to do some more research on the average return on the type of investment you plan to use with your Roth IRA.
The second thing I’d like to look at is the marginal tax rate. This figure is included so you can see how much you’d be losing if you were using an investment other than a Roth IRA that would tax your money when withdrawn. Below is a table that shows tax rates for different incomes and filing status’. To see more about how to use these figures click here.
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