Calculating Earnings From Your Roth IRA

Opening a Roth IRA can make a really big difference in how much you are able to save for retirement. While you are not going to get a tax deduction for increased Roth IRA contributions that you make to this account when you make them, all future earnings that you receive from your account are not going to be taxed. Having a Roth IRA means that you will get to enjoy tax-free growth for the entire time the money is in your account. While your money is growing, one of the things that you may wish to do is calculate its earnings.

A lot of people want to figure out just how much they will earn from a Roth IRA before the account is actually opened. While this is understandable, it's not really something that you can accurately gauge before you open the account. You can certainly estimate what you expect to earn, but you need to be realistic about it. If you assume too much, then you could find yourself in a bad position later on.

What Determines Earnings

There are a lot of elements that go into earnings for a Roth IRA, but one of the most important things that will affect your earnings is what you actually contribute to your account each year. Although there is a standardized limit to what you can contribute, not everyone has the funds to contribute this much. Your potential earnings on your account are going to be totally dependent on what you can afford to put into it each and every year. If you want to make more money for your future, then you need to consider contributing the top amount.

The earning on your Roth IRA are also going to depend largely on the rate of return for your investments. What this is will depend on what you choose to do with the money in your Roth IRA. If you choose to invest in stocks and bonds, your rate of return is going to vary depending on what they are. You may wish to choose some riskier investments and while these have the potential to make you a lot of money in your account, they can also end up losing you money in the end as well. Keep this in mind when thinking about earnings.

Get Help with Calculations

One of the things that you can do in order to estimate your future earnings is to use a Roth IRA calculator to determine how much money you can save for your retirement. You can access free Roth IRA calculators online and input simple information into them in order to get an idea of how much you are going to make over time. When doing this, though, you need to make sure that you understand how the calculator operates. If you don't, then you could end up with an estimate that is totally inaccurate, and this could really throw off your planning.

In order to make sure that you are calculating earnings from Roth IRAs correctly, you may need to get the help of a professional. You can sit down with a financial advisor before you even open an account and discuss what the possibilities are for you making money with a Roth IRA. You can even consult a financial advisor after you have started an account and have received earnings statements. Your advisor can help you look over these statements to see what your projected earnings in the future might be and help you decide if you need to save more for retirement.

Roth IRA

YOUR GUIDE TO
Roth IRA
INFORMATION & RESOURCES