Choosing the Right Account with a Free IRA Calculator

An Individual Retirement Arrangement (IRA) is a cornerstone of personal retirement strategy, but not all IRAs are created equal. The main difference between a Traditional IRA and a Roth IRA lies in how they are taxed, which can have a massive impact on your net worth in retirement. Our Free IRA Calculator is designed to demystify these differences by comparing a Traditional IRA, a Roth IRA, and a standard taxable account side-by-side.

Understanding the IRA Calculator Fields

This IRA Calculator uses your financial picture to forecast future growth:

• Current Balance: The amount you already have in your accounts.
• Annual Before-Tax Contribution: The amount you contribute each year. For the Roth and taxable accounts, we calculate the after-tax equivalent of this amount.
• Expected Rate of Return (%): Your estimated average annual growth rate.
• Current & Retirement Age: This sets the timeline for your savings.
• Current & Retirement Tax Rates (%): These are crucial. Your current rate affects Roth and taxable contributions, while your retirement rate affects Traditional IRA withdrawals.

How the Calculator Formula Works

Our Free IRA Calculator runs three parallel scenarios to show you the power of tax-advantaged growth:

1. Traditional IRA: You contribute with pre-tax dollars, so your contribution grows faster initially. However, the entire balance is taxed upon withdrawal in retirement. The calculator grows the full balance and then applies your retirement tax rate to the final amount to find the after-tax value.
2. Roth IRA: You contribute with after-tax dollars, so the initial investment is smaller than the pre-tax amount. However, all growth and withdrawals in retirement are completely tax-free.
3. Taxable Account: This is also funded with after-tax dollars. The key difference is that your investment gains (interest) are taxed *every year*. This "tax drag" significantly slows down compound growth over the long term.

By comparing the "Balance at Age (After Tax)" for all three, this IRA Calculator provides a clear, data-driven answer to which account type may be best for your financial future.