Understanding Your 403b Calculator and Defining Terms
A 403b calculator lets you to compute how much money you can save in your 403b plan when your retirement comes. There are several types of 403b calculators these days, but they work in generally the same manner and call for generally the same information to be used in the calculation.
General 403b calculator Definitions
Current Age in Years
This is your present age in years.
Anticipated Retirement Age in Years
This is the age in years you intend to retire.
Life Expectancy in Years
This is your life expectancy as you reach your predicted retirement age.
Current Amount in 403b Fund in US Dollars
On your 403b calculator, this is where you key in the amount you have in that account. If you have not started your 403b funding yet, you can just enter zero.
Annual Contribution to 403b (Percentage of Your Salary)
This is how much you want to contribute, or are currently contributing, to your 403b plan expressed in terms of a specific percentage of your salary. The effect of decreasing or increasing your yearly contribution percentage will be seen on your 403b fund balance on your retirement.
Employer Match (Percentage of Contribution)
Employers will usually match employee contributions to provide employees benefits, as well as to encourage their participation in the company’s program. If your employer does this, put that percentage here. Otherwise, then enter zero.
Employer Maximum (Percentage of Salary)
Employers will sometimes only match up to a certain percentage of the salary of their employees. If your employer’s maximum applies to their match, put that that amount here. The present limit on employer matches is 6%.
Expected Annual Return on 403b Fund (Percentage)
This is your anticipated annual rate of return, which you intend to realize on your 403b fund from now to your retirement age.
403b Fund Growth Over Time (in US Dollars)
This is the computed rise in your 403b fund increase over time as you become older year after year. This series of numbers, which is affected by employee-employer matching and your inputted growth rate, and limits your contributions to what the law (2015) currently allows.
403b Fund Balance at Retirement (in US Dollars)
This will be your 403b fund at retirement age, if you make yearly contributions to the accounts and attain your expected rate of return, and your employer keeps matching funds at your indicated rate.
Salary at Retirement Age (US Dollars/ Year)
This is your expected salary when you come to the retirement age you’ve previously indicated.
Annual Income from 403b (US Dollars / Year)
This is the retirement income you can expect your 403b account to give you annually. Remember that withdrawals from 403b funds are taxable, and inflation will reduce the buying power of such future dollars.
Percentage of Final Pay
This is the part of your salary upon retirement age that could your 403b funds can replace. All retirement income sources need to replace 70% to 80% of your final pay as a rule of thumb. A 403b calculator certainly comes in handy for this and all other related calculations.