When it comes to planning for retirement, the growth rate of an IRA is an important factor to consider. The time horizon, risk tolerance and overall mix of investments are all key elements that can affect the growth rate of an IRA. The investment mix in your IRA is likely to change as you approach retirement age, and how you decide to allocate your assets will depend on your investment objectives and temperament. The American Individual Investors Association states that an aggressive investment portfolio can be expected to yield approximately 7.2 percent annually over a 10-year period.
A moderate portfolio should grow by 6.6 percent during the same timeframe, while a conservative portfolio should offer an annualized return of 5.9 percent. It's important to note that these figures are for general informational and educational purposes only and should not be interpreted as financial or investment advice. When deciding how to invest your IRA, it's important to take into account your personal financial situation, needs, risk tolerance and investment objectives. Investing involves a risk that includes the possibility of losing capital.
Contributing to a traditional IRA can generate a current tax deduction, in addition to allowing for tax-deferred growth. While long-term savings in a Roth IRA may result in better after-tax returns, a traditional IRA can be an excellent alternative if you qualify for a tax deduction.To estimate the growth of your IRA for planned contributions, you can check with your account manager for the average annual growth rate or use the average of 7 to 10 percent. There are many online calculators available to help you calculate your projected retirement savings at the growth rate of that IRA.