The value of your investment can be affected by both taxes and inflation. Use this calculator to estimate their impact. Enter your information in the fields and then click on Calculate to see year-by-year and total effects of taxes and inflation on your investment. This calculator assumes that taxes are paid on investment earnings each year. Retirement plan earnings may be tax-deferred or, for qualified Roth account withdrawals, tax-free.

Definitions

Amount currently invested

The amount you have invested at the start of the period.

Monthly contributions

The amount you will invest at the beginning of each month.

Years to invest

The number of years you plan to invest.

Hypothetical annual rate of return

The expected pretax annual return on your investments. Since 1926, the average annual total return for the S&P 500, an unmanaged index of large U.S. stocks, has been about 10%. Investments that offer the potential for higher rates of return also come with a higher degree of risk. Hypothetical rates of return are for illustrative purposes only and are not intended to portray actual results. Actual rates of return will vary over time. Past results are not predictive of results in future periods.

Federal income tax rate

The marginal federal tax rate you expect to pay on your earnings. Use the table below to estimate your current tax rate.

Filing status and income tax rates for 2009 This information is subject to change by the IRS.
Tax rate	Married filing jointly or qualified widow(er)	Single	Head of household	Married filing separately
10%	$0-$16,700	$0-$8,350	$0-$11,950	$0-$8,350
15%	$16,701-$67,900	$8,351-$33,950	$11,951-$45,500	$8,351-$33,950
25%	$67,901-$137,050	$33,951-$82,250	$45,501-$117,450	$33,951-$68,525
28%	$137,051-$208,850	$82,251-$171,550	$117,451-$190,200	$68,526-$104,425
33%	$208,851-$372,950	$171,551-$372,950	$190,201-$372,950	$104,426-$186,475
35%	$372,951 and over	$372,951 and over	$372,951 and over	$186,476 and over

State income tax rate

The marginal state tax rate you expect to pay on your investment.

Expected inflation rate

What you expect for the average inflation rate. Based on long-term historical rates, inflation has averaged about 4% a year.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus and/or summary prospectus, which can be obtained from your plan’s financial professional or downloaded and should be read carefully before investing.

The calculator deducts income taxes from earnings on an annual basis using the income tax rates that you specify. This will tend to understate the performance of the taxable account in circumstances where long-term capital gains and qualified dividends, which are currently taxed at lower rates than ordinary income, are a component of investment returns, as is the case for investments with significant equity holdings.

This calculator was developed by KJE Computer Solutions, which is not affiliated with American Funds. It is intended for use in making a rough estimate of the effects of taxes and inflation on your investments. We do not guarantee the accuracy of the results or their relevance to your particular circumstances. We encourage you to seek the assistance of your financial professional.

For more information regarding this calculator or its calculations, please e-mail KJE Computer Solutions at afquestions@dinkytown.net or visit http://www.dinkytown.net.

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