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Step 1
Understand the types of IRAs available as well as the pros and cons of each account. Two common IRA account types are Roth and traditional IRAs. The main difference between the two is that Roth IRA contributions are not tax deferred, meaning you pay taxes prior to contributing the money to your account.
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Step 2
Begin gathering your personal information and, if married, your spouse's information as well. Know your age and what you expect to contribute each year. Most calculators assume you'll contribute at the beginning of the year while you can still claim the amount as a deduction on the prior year's taxes.
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Step 3
Know the age at which you wish to retire, the expected rate of return, your current tax bracket and the expected tax rate when you retire. Traditionally you'll be in the same or lower tax bracket when you retire because your income will decrease. Most calculators will have a percentage already filled in, but you can change it if it differs from your personal situation.
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Step 4
Have your most recent tax return information available. You'll need to know your adjusted gross income to get a good look at your contributions and what they'll do over time.
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Step 5
Input your information into the correct areas of the calculator. After you've entered your information, the calculator will show you the difference between the Roth IRA and traditional IRA accounts as well as the total amount saved at retirement.
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Step 6
Update your information and recalculate your contributions when your financial situation changes so you can see the impact on your retirement savings.
