What a $500,000 Roth IRA Could Be Worth by the Time You Retire in 2035

You’ve worked hard and made sacrifices to tuck money away in your Roth IRA. The question is, will it be enough when the time comes?

The answer to the question depends on several different inputs, not the least of which are how much you’ve saved up to this point and how long you have until you retire. For just a bit of perspective, though, let’s assume you’ve managed to save half a million bucks and that you’ll be retiring in 2035. You can make any mental adjustments for your particular situation from there.

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A lot can happen in nine years

There are actually two answers to the question, the latter of which is arguably the more meaningful one.

But first things first. In the first scenario, let’s assume this money will continue earning the S&P 500′s (SNPINDEX: ^GSPC) long-term average annual gain of 10%, but that we won’t be adding any new capital to it between now and then. In nine years, that $500,000 — assuming reinvestment of any dividends paid along the way — would grow to a nest egg of just under $1.2 million (according to calculations from Calculator.net).

Nice! And of course, since this is a Roth IRA, any withdrawals from it are tax-free.

That’s the less realistic projection for most investors in this situation, however. More likely than not, you’ll continue contributing to this account. So, let’s conservatively say you’ll be adding another $6,000 per year to your Roth. How much would you have by 2035 in this scenario? Again, according to Calculator.net, almost $1.27 million, or roughly $90,000 more, on an additional $54,000 in contributions.

More is obviously better. The relatively small upside of making nine additional years’ worth of annual contributions of $6,000, however, makes one thing clear: Getting started sooner is better than waiting. Time has almost certainly driven the bulk of the growth of what’s become your half-million-dollar nest egg.

Adjust for your particular situation

These are just ballpark projections, of course. You may fare better. Or, you may be able to make bigger contributions to your Roth between now and then.

At the other end of the spectrum, you might want to start dialing back the inherent risk of an all-stock portfolio as 2035 approaches, making it less likely you’ll be able to match the S&P 500’s average annual return of 10% for the entirety of the nine years in question.

The numbers still paint an important picture, though, with some broad brush strokes. Even if you don’t feel like you have quite enough saved up so far, considering the cumulative effect of compounded growth really ramps up in just a few years, you might be closer to your retirement fund goal than you realize.

Again, though, the earlier you get that compounding ball rolling and the longer you can let it roll, the better off you are.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.