IRA Match growth potential

To help you visualize the effects of compound interest on your potential IRA returns over time, we used a hypothetical annualized rate of return of 10% for your invested IRA Match.

Keep in mind, your actual returns will vary and may be less than what’s shown in the following example of potential growth of only your IRA Match over the next 40 years. It’s important to remember that your returns are not guaranteed and this illustration is hypothetical. Review in the following Disclosures section for more details about your risks.

IRA match growth value prop

Example calculation

You can use this formula calculator to project how your IRA Match might grow over time with the following formula and assumptions:

  • Formula: Initial investment ($0) + Monthly IRA Match amount ($5) * Length of time (40 years) * Interest rate (10%) with an Interest rate variance of 0 and Annual compound frequency = Potential total retirement savings just for the 1% match

  • Hypothetical and other assumptions:

    • You contribute $6,000 to your IRA each year. In the formula example, you’d divide it by 12 months for the $500 per month or a $5 match.
    • You earn a 1% IRA Match every year, which would be 1% multiplied by $6,000 equals $60 each year or in the example, $5 a month.
    • You invest your full IRA Match amount and earn an average of 10% each year over 40 years.
    • This calculation assumes $6,000 is the maximum IRA contribution limit and doesn’t account for potential changes in the future. It also doesn’t account for catch-up contributions where the annual limit is more.
    • For the purposes of illustrating the hypothetical growth of the 1% IRA Match, the initial investment is $0 in the example. In actuality, you must contribute to earn a 1% match.

Disclosures

The hypothetical illustrations of mathematical principles that are described in this article and in the app do not predict or project the performance of any investment or strategy, nor do they represent any guarantee of returns. Individual investor results will vary.

  • The impact of the Early IRA Match Removal Fee (when applicable) and any investment fees have not been included in the examples, nor has the impact of inflation been taken into account.

  • Ordinary income and, in some cases, penalty taxes may apply to distributions from retirement accounts, effectively reducing gross returns.

  • All investments involve risk. Investors should consider their investment time horizon and income tax bracket when making investment decisions. Past performance does not guarantee future results. Robinhood does not provide tax advice.

Reference No. 2575176
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