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Our IRA calculator can help you estimate how much money you will have saved for retirement based on your income, contributions, and the number of years you have until retirement. It's a helpful tool to use when planning for your future.

To learn more about individual retirement accounts, check out some frequently asked questions below. And if you like using the calculator, please share it with your friends.


What is the point of this calculator?

Many financial advisors recommend an IRA for retirement. That said, if you are still a ways from retirement, you may be wondering, "How much can I save with a Traditional IRA?"

The IRA calculator allows you to explore that question a little further. It illustrates the potential value of a Traditional IRA based on a few simple details.

With the future of social security in jeopardy, many adults could be left in a vulnerable position by the time they reach retirement age. For many, an IRA could be the answer.

What is an IRA?

IRA stands for Individual Retirement Account. It is an investment account that can be used in tandem with or in place of an employer-sponsored account.

There are a couple of distinctive features to the traditional IRA.

Age and Income Limits

Anyone younger than 70 and a half years old can contribute to a traditional IRA.

One of the benefits of an IRA compared to other accounts like a Roth IRA is that there is no annual income limit. This means that any saver at any income level can contribute to an IRA.

Tax Incentives

When you make contributions to a traditional IRA, you are able to deduct that income from your taxes. This can be an effective way to both save for retirement and get taxed at a lower bracket.

Keep in mind that you will have to pay taxes on the balance of your IRA when you take a distribution at retirement. The money you take in distribution will count as income, so it is important to plan carefully when to withdraw.

What are the 2019 contribution limits?

Traditional IRAs do have contribution limits. Savers under 50 years old are capped at $6,000 (+ $500 from 2018) in contributions per year.

After age 50, you can contribute an extra $1000 per year for a total of $7,000. This system encourages additional saving as retirement nears.

Can you make withdrawals from a traditional IRA?

Now that we've covered what an IRA is, and how it differs from some other retirement accounts, we can take a closer look at the question of making withdrawals.

The ability to withdraw from an account is often a significant concern for younger savers.

While it is important to squirrel away money for retirement, it's quite possible that a 25-year-old will face circumstances before age 59 and a half that will require tapping into savings.

It's important to balance savings accounts with long-term investments that are difficult to touch and accessible accounts that have liquid funds for emergencies. So where does an IRA fall in that continuum?

Simply put, you can technically take money out of an IRA at any time. The catch is that, depending on when and how you do so, there may be penalties attached.

Withdrawing for Cash

Once you reach age 59 and a half, you can withdraw from your IRA without penalty. Of course, you will pay tax on the withdrawal.

If you take out a withdrawal before you reach retirement age, you may face a 10% penalty. Keep in mind that money withdrawn from a traditional IRA will count toward your gross income during tax season.

Depending on how much money you withdraw, this could put you into a different tax bracket for that year. The expense of being in a higher tax bracket can quickly add up, especially in addition to the 10% penalty.

Penalty Exceptions

There are a few exceptions where you can withdraw money from an IRA before retirement without paying the 10% penalty.

These exceptions are usually related to specific life events.

For instance, if you are purchasing your first home, have become disabled, or are facing medical expenses that add up to more than 10% of your income, you can withdraw up to $10,000 penalty-free.

You can also withdraw for some education expenses or to pay for health insurance if you've been unemployed for at least 12 weeks.

Even with penalty exceptions, however, the money you withdraw from an IRA will be taxed as income. If you are at the upper end of your tax bracket, withdrawing $10,000 might be enough to bump you into the next one.

Rolling Over

While rolling over money from an IRA is not the same as withdrawing, it is, technically, a way to remove money from an IRA account without a penalty.

If you have a traditional IRA, you can roll it over in one of three ways: into another IRA, into a Roth IRA account, or into a 401k. This can be a good way to consolidate accounts or to move to a different advisor.

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