Understanding Your 403b Calculator and 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 that you plan 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 enter the amount in your account. If you have not yet started funding your 403b plan, then 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. By raising or lowering your annual contribution percentage, you can see the effect on your 403b fund balance upon retirement.
Employer Match (Percentage of Contribution)
Employers will typically match employee contributions in order to provide employee benefits, and to make them participate in the company’s program. If your employer does this, put that percentage here. If not, then simply 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 has a maximum applying to their match, then that amount should be entered here. Six percent is the current limit on employer matches.
Expected Annual Return on 403b Fund (Percentage)
This is your predicted annual rate of return, which you are expecting to realize on your 403b fund beginning now and when your retirement comes.
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 values is influenced by your inputted growth rate and employee-employer matching, and confines your contributions to the present maximums the law (2015) permits.
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 estimated salary upon reaching the retirement age you’ve earlier specified.
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. The rule of thumb is, all retirement income sources must replace 70% to 80% of your final pay. A 403b calculator definitely comes in handy not just for this but for all other related computations.