Check Out Our Traditional IRA Calculator

Dear Clients and Friends:

A few weeks ago, we highlighted the Retirement Planner Calculator on available on this website.  Aside from the Retirement Planner Calculator, our website has 13 additional financial planning and personal finance tools.  One of those tools is the Traditional IRA Calculator which we are highlighting today.

Contributing to a Traditional IRA creates a current tax deduction, plus it provides for tax-deferred growth. For those who qualify for Traditional IRA deductions, it is a great tool for retirement saving.  Note, some people are better off contributing to a Roth IRA rather than a Traditional IRA.  You should seek professional advice when deciding between Traditional and Roth IRA’s.

Click here to access our Traditional IRA Calculator.

How to use the tool:

  • Begin by entering the current balance (starting balance) of your Traditional IRA, your current age, and the age at which you wish to retire.                               
  • Next enter the annual contribution, which is the amount you will contribute to your Traditional IRA each year.  If you would like to contribute the maximum allowed to your account each year, simply check the box directly next to “Maximize contributions.” This includes the additional catch-up contribution available when you are age 50 or over.
  • At this point, you should enter your adjusted gross income, which can be found on Line 37 of your Income Tax Return (Form 1040).  It is important to note that there are no income limits preventing you from contributing to a Traditional IRA.  Annual income only affects your ability to make a tax-deductible contribution. However, there are age limits.  You are cannot contribute to a Traditional IRA after turning 70 1/2.
  • Additional input spaces can be found by clicking on the “Investment return, taxes, employment and marital status” tab.  These additional input spaces include two check boxes indicating if you are married and if you have an employer retirement plan. This is also where you record the rate of return you expect to earn on your investments, the current tax rate, and your post-retirement tax rate.
  • Finally, after all of the data is input you should click on the “Calculate” button and then the “View Report” button.  A report will appear on the screen that provides you with a comparison of your projected IRA balance at retirement versus your taxable account balance had you not contributed to the IRA.
  • If you are not clear on the meaning of one or more of the categories, you can refer to the definitions section below the tool to gain clarification.  You can also call us and we would be happy to answer your questions.

We hope you find the tool useful and urge you to call us if you have any questions or concerns.

Warm Regards,

Berkson Asset Management, Inc.
Registered Investment Advisor

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