Retirement Planner: 401(k) + Roth IRA + Taxable

Three accounts, one growth engine

Compounding does not care which account a dollar sits in, so each bucket runs through the same arithmetic: monthly compounding at the annual return divided by twelve, with contributions added at the end of each month until your retirement age. The worked example — age 35 retiring at 65 at an assumed 6% return — is computed at build time by the same tested engine as the calculator above:

The 4% rule converts that combined balance into a first-year income figure: $59,452.84 in the example. It is a heuristic from William Bengen's 1994 study — withdraw 4% of the starting portfolio in year one, adjust for inflation after — not a guarantee; The 4% Rule guide covers where it comes from and where it strains.

What the formula does with each input

Each bucket is one run of the future-value formula documented on the methodology page: FV = P·(1+r)ⁿ + PMT·[((1+r)ⁿ − 1) / r], where P is the bucket's starting balance, PMT its level monthly contribution, r the annual return divided by twelve, and n the number of months between the two ages — 30 years, so 360 months, in the pinned example. The first term compounds whatever the bucket already holds. The second is the annuity formula for a stream of equal end-of-month contributions, each of which compounds only for the months remaining after it arrives. A 0% return degrades to simple addition: the ending balance is the starting balance plus every contribution.

Two inputs do most of the work. The horizon enters as an exponent, so lengthening it acts on the starting balance and on every contribution at once, and the earliest contributions are the ones that compound longest. The return enters twice — inside the growth factor and as the divisor of the annuity term — which is why its effect on a long projection is not proportional: a one-point change in the rate does not produce a one-point change in the result. The contribution, by contrast, enters linearly; doubling it doubles the annuity term and leaves the compounded starting balance untouched. The model treats each contribution as a level dollar amount for the entire horizon. It does not escalate with pay, which is why the 401(k) Calculator — the one tool on this site that steps salary growth and the employer-match cap month by month — exists separately.

Because the formula is linear in P and PMT, splitting money into three buckets changes nothing about the growth. Pool the pinned example's inputs into one account — $80,000 of starting balance and $1,000 a month at the same assumed 6% for the same 30 years — and a single run of the formula returns $1,486,321.06, the figure in the combined row. The three-way split exists for one reason: it keeps the tax character of each slice visible in the output, which a pooled number erases. That is also why all three buckets share one return and one horizon. The companion guide, 401(k), Roth IRA, and Taxable Accounts: How They Fit Together, makes the same point about combining this site's single-account calculators: the pieces add cleanly only under a shared set of assumptions.

A second example: a later start on a shorter horizon

The pinned example is a long horizon with modest balances. Reverse both: a saver at 50 projecting to 67, with $200,000 plus $1,000 a month in the traditional account, $40,000 plus $500 a month in the Roth, and $60,000 plus $400 a month in the taxable account, at an assumed 5% return. Age 67 is used here only because it is one of the statutory ages walked through in Retirement Age Milestones; the model attaches no meaning to any age and simply subtracts one from the other, giving 17 years, or 204 months.

Read the two tables against each other and the horizon's role is plain. This example puts in $687,600.00 of contributions against the pinned example's $440,000.00, and still ends with the smaller combined figure — $1,309,652.25 against $1,486,321.06 — because the shorter horizon and the lower assumed rate leave the return less to do. Growth is 47% of this combined figure ($622,052.25); over 30 years at the pinned example's assumed 6%, growth is 70% of the total ($1,046,321.06). Neither reading says anything about what a return will actually be. It says only where each ending balance came from, which is what the contributions and growth columns are for. The 4% line for this example is $52,386.09, or $4,365.51 a month in year one.

A third example: two buckets, one seed balance

Not every bucket has to be funded. The engine requires only that at least one balance or contribution be greater than zero, and an empty bucket projects to zero. That makes a two-bucket run a clean way to isolate one input. Take a saver at 28 projecting to 60 at an assumed 7% return, contributing $300 a month to a traditional account that starts empty and the same $300 a month to a Roth that starts with $5,000, with nothing in the taxable account. The two contribution streams are identical, so the two annuity terms are identical, and the only difference between the rows is the seed.

The Roth row ends $46,661.99 ahead of the traditional row. Run the $5,000 seed through the formula on its own — no contributions, the same assumed rate, the same 32 years — and it grows to $46,661.99: the same figure. That is the linearity of the formula seen from the other direction. The gap between the rows is the first term, P·(1+r)ⁿ, applied to the seed, and nothing about the $300 stream changes it. The same run shows how much of an ending balance the earliest dollars account for: $46,661.99 of the Roth's $475,185.30 traces to money that was in the account on day one.

The combined number is pre-tax — and the after-tax view is an illustration

The three ending balances are not the same kind of dollars. Traditional 401(k)/IRA withdrawals are generally taxed as ordinary income, qualified Roth withdrawals are not, and the taxable account pays tax along the way. The combined figure is therefore a pre-tax planning number. If you enter an assumed tax rate, the calculator shows an illustration: the traditional balance discounted by your own assumed rate, with the Roth and taxable balances re-added unchanged. The tax rates and brackets that will exist at your retirement are unknowable, and this site does not guess them — the rate in that field is your assumption, applied mechanically. The illustration also does not model the tax the taxable account owes on its own dividends and gains, so its slice of the after-tax figure is still overstated. The mechanics of all three account types — contribution, growth, and withdrawal taxation — are laid out in the companion guide, 401(k), Roth IRA, and Taxable Accounts: How They Fit Together.

The arithmetic of that illustration is worth seeing once, on the pinned inputs, because it shows both what the field does and what it cannot do. At an assumed 20% — a round number chosen for the illustration, not a forecast of any bracket — the traditional balance of $803,386.28 becomes $642,709.03, and the combined illustration is $1,325,643.80. At an assumed 30% the traditional slice becomes $562,370.40 and the combined illustration $1,245,305.17. The gap between the two combined figures, $80,338.63, is one tenth of the traditional ending balance and nothing else: the Roth and taxable rows are identical in both runs, and the 4% line is identical too, because it is always computed from the pre-tax combined figure regardless of what the rate field holds. The illustration moves one slice by one multiplier. It says nothing about which dollars are withdrawn in which year, how a withdrawal interacts with other income in that year, or what the rules will be by then.

How the 4% line relates to the 4% rule

The last line of the output multiplies the combined figure by 0.04 — $59,452.84 in the pinned example, which the site's drawdown engine also divides into $4,954.40 a month. That is the whole of what this page computes from the rule: its first step. The convention described in The 4% Rule: Where It Comes From and What It Assumes has a second step this page does not run — in every later year the dollar amount, not the percentage, is adjusted for inflation, and the portfolio's balance never re-enters the calculation. So the figure here is a year-one number and no more. It is not 4% of each year's balance, and it does not describe how long the combined figure lasts. The guide covers where the rule comes from — William Bengen's 1994 study and the 1998 Trinity study, historical back-tests rather than a guarantee — and what those back-tests held fixed: a specific mix of stocks and bonds, a 30-year horizon, and no fees or taxes. That last fixture matters here in particular. The 4% line is 4% of a pre-tax figure, so the traditional slice of it carries the same embedded tax bill as the balance it came from. The Retirement Withdrawal Calculator computes the first-year figure at other initial rates and, in its runway mode, how many years a balance lasts at a chosen spending level and real return.

Reading the output

The result box reports, for each funded bucket, the ending balance and its split into contributions and growth; then the combined pre-tax figure; then the 4% line; and, only when a rate was entered, the after-tax illustration. Balances are nominal — future dollars, not today's — which is the site-wide convention: to see purchasing power in today's dollars, enter a real (after-inflation) return instead of a nominal one and read every output as today's dollars. Four misreadings account for most of the confusion a tool like this produces:

• Treating the combined figure as spendable. It is a sum of three kinds of dollars. The traditional slice is generally taxed as ordinary income on the way out, and the illustration, if used, is an assumption applied mechanically.
• Treating the 4% line as an annual rule. It is 4% of the starting portfolio once; the convention then adjusts the dollar amount for inflation and never consults the balance again.
• Treating the projection as a forecast. A constant return shows the shape of compounding under one assumption. Actual returns arrive in a varying order that a single rate cannot represent, and a poor run early in retirement does damage an average conceals — sequence-of-returns risk, which the 4% rule guide describes.
• Treating a match formula as a percentage input. The traditional monthly field takes dollars. A formula such as "50% up to 6% of pay" has to be converted first, which the 401(k) Calculator does from salary and match terms.

What this tool does not model

The employer match formula. Enter match dollars directly in the traditional monthly contribution — the 401(k) Calculator converts a match formula and salary into that dollar figure. Contribution limits. The IRS adjusts the 401(k) and IRA limits annually; this page quotes no figures — irs.gov publishes the current ones. The Roth IRA Calculator models the Roth leg on its own, and the Investment Calculator handles any single account without retirement framing. Taxes on the taxable account's gains as they accrue. Social Security and pensions. Return variability. Real returns arrive in an unpredictable order, not as a smooth average, and a run of poor returns near retirement does disproportionate damage — sequence-of-returns risk. A projection built on a constant return shows the shape of the compounding, not the range of outcomes.

Ages. The two age fields set the horizon and nothing more. The model does not know about the early-distribution line at 59½, or that required minimum distributions from traditional accounts currently begin at 73 — it projects a balance to the retirement age entered and stops. Those lines, and what changes at each, are laid out in Retirement Age Milestones, and this site's guides are collected on the guides index. Drawdown. Nothing after the retirement age is simulated: no withdrawals, no inflation adjustment, no depletion date. The Retirement Calculator carries a single combined balance through a month-by-month drawdown, and the RMD Calculator computes a required distribution from a balance and an age.

Frequently asked questions

Not financial advice: a general educational estimate that assumes a constant rate of return and excludes taxes on the taxable account's gains, contribution limits, Social Security, and market volatility. The after-tax view is an illustration built on your own assumed rate. Your real results will differ. Values are processed locally in your browser and never transmitted. See the methodology page.