Calculate the Future Value of Your Savings Accounts

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How to Calculate What Your Savings Will Be Worth

Planning for the future is crucial, and understanding how your savings will grow over time is an essential part of that process. 

Our savings calculator helps you estimate the future value of your savings. Here’s a step-by-step guide on how to use it effectively.

Taxable Savings

  • Current Savings - This is the amount of money you already have saved. Enter the total balance of your existing savings. This provides the base amount on which your future savings will grow. 
  • Monthly Savings - This is the amount of money you plan to add to your savings every month. For example, if you plan to save $200 each month, enter that value. 
  • Marginal Tax Rate - This is the percentage of tax you pay on each additional dollar of income. If you are in the 24% tax bracket, for instance, the interest earned on your savings will be reduced by this percentage.

Tax-Deferred Savings

  • Current Savings - Similar to taxable savings, this is the amount of money you currently have in tax-deferred accounts like a 401(k) or IRA. 
  • Monthly Savings - This is the amount you plan to contribute to your tax-deferred savings each month. 

Assumptions

  • Evaluation Period - Enter the number of years you plan to keep saving. This period will determine how long your savings have to grow. 
  • Expected Rate of Return - This is the annual percentage rate at which you expect your savings to grow. Different investments have different expected returns, so consider your strategy when entering this number.


Taxable vs. Tax-Deferred Savings


Taxable Savings

These accounts do not have tax advantages. Interest, dividends, and capital gains are subject to taxes each year, which can reduce your overall return. Examples include regular savings accounts and brokerage accounts. 

For instance, if you earn $100 in interest and are in the 24% tax bracket, you'll owe $24 in taxes, reducing your net earnings.

Tax-Deferred Savings

These accounts provide tax benefits that can enhance growth. Contributions are often tax-deductible, and earnings grow tax-free until withdrawn, usually in retirement. Examples include 401(k)s, IRAs, and other retirement accounts. 

The tax deferral allows for potentially higher growth since you are not paying taxes on the earnings each year. For example, if your 401(k) earns $500 in interest, you don't pay taxes on that amount until you withdraw the funds, typically at a lower tax rate in retirement.