How do you use an IRA calculator?


Quick Answer

Online individual retirement account calculators are used by entering a starting balance, age of retirement, yearly contribution, adjusted gross income and the account holder's current age to calculate how much the account is likely to hold once the account owner retires, according to Bankrate. IRA calculators can also be used to determine an IRA before and after taxes.

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Full Answer

There are two different kinds of IRA calculators: those for traditional IRAs and those for Roth IRAs, according to Bankrate. Both require most of the same information to calculate how much the account holder is likely to have upon retirement, but a Roth IRA calculator requires the expected rate of return and a marginal tax rate. A Roth IRA calculator also informs an individual of his taxable savings. Besides using an IRA calculator, it's best that a person seek out professional financial and retirement advice from experienced professionals.

In addition to determining how much an account is likely to hold once the account owner retires, IRA calculators also take into consideration whether an individual chooses to maximize his contributions and can also account for nondeductible contributions, notes Bankrate. Calculators can also include definitions of terms common to IRAs. Depending on the calculator, it might automatically determine if the account holder's income limits his total tax deduction.

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