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Traditional IRA Growth Formula:
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The Traditional IRA Calculator estimates the future value of your Individual Retirement Account investments based on your contributions, expected annual return rate, and investment time horizon. It helps project retirement savings growth.
The calculator uses the compound interest formula:
Where:
Explanation: The formula calculates how your contributions grow over time through compound interest, where earnings are reinvested to generate additional earnings.
Details: Accurate retirement planning requires understanding how your investments may grow over time. This calculator helps visualize the power of compound interest and long-term investing.
Tips: Enter your annual IRA contributions in USD, expected annual rate of return as a decimal (e.g., 0.07 for 7%), and number of years you plan to invest. All values must be positive.
Q1: What is a realistic rate of return for IRA investments?
A: Historically, stock market returns average 7-10% annually, but actual returns vary based on investment choices and market conditions.
Q2: Are Traditional IRA contributions tax-deductible?
A: Yes, Traditional IRA contributions are typically tax-deductible in the year they are made, with taxes deferred until withdrawal in retirement.
Q3: What are the annual contribution limits?
A: For 2024, the IRA contribution limit is $7,000 ($8,000 if age 50 or older), subject to income and other eligibility requirements.
Q4: Does this calculator account for inflation?
A: No, this shows nominal returns. For real returns, subtract expected inflation rate from your expected return rate.
Q5: Can I use this for Roth IRA calculations?
A: The growth calculation is the same, but Roth IRA has different tax treatment (contributions are after-tax, withdrawals are tax-free).