IRA Savings Comparison Calculator: Tax Deferred Growth Vs Taxable Growth

IRA Savings Comparison Calculator Sign

This calculator will forecast the growth of a Traditional IRA, and then compare the tax-deferred results to the growth of a non-qualifying investment.

When planning for your retirement, it's important to understand the difference between a tax-deferred investment and non-tax-deferred investment.

In the case of an Individual Retirement Account (IRA), not only are your contributions deductible from your taxable income in the year you made them, but the earnings also grow on a tax-deferred basis.

In the case of a non-tax-deferred investment, the contributions you make will be with after-tax dollars, and the earnings will increase your annual taxable income. This means that you are giving up the opportunity to earn interest on the funds that will be used to pay the taxes.

As this calculator will attempt to point out, the foregone interest on non-deferred taxes can be substantial over the long run.

Please keep in mind that the results of this calculator are merely estimates. Be sure to consult a qualified tax professional before making any investment decisions.

Also keep in mind that you might be better off first to pay off any high-interest debt you have, and then use the freed-up payment amounts to contribute to your retirement investment.

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IRA Savings Comparison Calculator

Calculate IRA savings growth and compare those tax-deferred results to a non-qualifying investment.

Special Instructions

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Selected Data Record:

A Data Record is a set of calculator entries that are stored in your web browser's Local Storage. If a Data Record is currently selected in the "Data" tab, this line will list the name you gave to that data record. If no data record is selected, or you have no entries stored for this calculator, the line will display "None".

DataData recordData recordSelected data record: None
Contribute/yr:Annual contribution:Annual contribution amount:Annual contribution amount (pre-tax dollars):

Annual contribution amount (pre-tax dollars):

Enter the pre-tax dollar amount of your planned contributions to a retirement investment. Enter as a dollar amount, but without the dollar sign and any commas.

The maximum annual IRA contribution was $6,000 per spouse ($7,000 if age 50 or older) the last time this calculator was updated, therefore the maximum entry in this field is typically $14,000.

However, if yours is a SEP IRA (contribution can be up to 20% of your net profits), your entry may exceed the non-SEP limit.

Age now:Current age:Your current age:Your current age:

Your current age:

Enter your current age in years. Enter as an integer (no decimal points or fractions).

Retire age:Age to retire:Age you plan to retire at:Age you plan to retire at:

Age you plan to retire at:

Enter the age you plan to retire at. Enter as an integer (no decimal points or fractions).

Return rate:Rate of return:Annual return on investments:Annual return on investments:

Annual return on investments:

Enter the before-tax annual percentage rate you expect to earn on your investments between now and when you retire. Enter as a percentage, but without the percent sign (for .06 or 6%, enter 6).

Tax rate:Current tax rate:Current marginal tax rate:Current marginal tax rate:

Current marginal tax rate:

Enter your current marginal tax rate. Enter as a percentage, but without the percent sign (for .15 or 15%, enter 15).

BalanceBalance at retireBalance at retirementBalance at retirement:

Balance at retirement:

The left-hand column is the estimated future value of your IRA, which has grown at the full expected return on investment (tax-deferred).

The right-hand column is the estimated future value of a non-IRA investment, which has grown by the after-tax return on investment (ROI x (1 - tax rate)).

Taxes dueTaxes due if drawnTaxes due if withdrawnTaxes due if withdrawn at retirement:

Taxes due if withdrawn at retirement:

The left-hand column is the amount of taxes that would be due on your IRA if you withdrew the funds at retirement, since tax on both contributions and earnings are deferred until the funds are withdrawn.

The right-hand column is zero, since you would have already paid taxes on the contributions and earnings.

After-tax drawAfter-tax withdrawalAfter-tax withdrawalAfter-tax withdrawal at retirement:

After-tax withdrawal at retirement:

The left-hand column is the estimated after-tax value of your IRA.

The right-hand column is the estimated after-tax value of a non-IRA investment.

IRA savingsIRA savingsSavings from IRA tax deferralSavings from IRA deferral of taxes:

Savings from IRA deferral of taxes:

The left-hand column represents the additional earnings you would realize by contributing to a tax-deferred IRA instead of contributing to a non-tax-deferred investment.

If you would like to save the current entries to the secure online database, tap or click on the Data tab, select "New Data Record", give the data record a name, then tap or click the Save button. To save changes to previously saved entries, simply tap the Save button. Please select and "Clear" any data records you no longer need.

Help and Tools

Adjust Calculator Width:

Move the slider to left and right to adjust the calculator width. Note that the Help and Tools panel will be hidden when the calculator is too wide to fit both on the screen. Moving the slider to the left will bring the instructions and tools panel back into view.

Also note that some calculators will reformat to accommodate the screen size as you make the calculator wider or narrower. If the calculator is narrow, columns of entry rows will be converted to a vertical entry form, whereas a wider calculator will display columns of entry rows, and the entry fields will be smaller in size ... since they will not need to be "thumb friendly".

Show/Hide Popup Keypads:

Select Show or Hide to show or hide the popup keypad icons located next to numeric entry fields. These are generally only needed for mobile devices that don't have decimal points in their numeric keypads. So if you are on a desktop, you may find the calculator to be more user-friendly and less cluttered without them.

Stick/Unstick Tools:

Select Stick or Unstick to stick or unstick the help and tools panel. Selecting "Stick" will keep the panel in view while scrolling the calculator vertically. If you find that annoying, select "Unstick" to keep the panel in a stationary position.

If the tools panel becomes "Unstuck" on its own, try clicking "Unstick" and then "Stick" to re-stick the panel.