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 lots of 403b calculators nowadays, but they work in a rather similar manner and require rather similar pieces of information to be used in the computation.
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 upon reaching your anticipated retirement age.
Current Amount in 403b Fund in US Dollars
If you have a 403b fund at present, then this is where you enter the amount in that account on your 403b calculator. 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. If you increase or decrease your annual contribution percentage, you will see the impact of such action on your 403b fund balance as you retire.
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. If not, then simply enter zero.
Employer Maximum (Percentage of Salary)
Certain employers will only match up to a particular percentage of their workers’ salary. If your employer has a maximum that applies to their match, that amount goes here. Six percent is the current limit on employer matches.
Expected Annual Return on 403b Fund (Percentage)
This is your expected annual rate of return, which you plan to realize on your 403b fund between today and your retirement.
403b Fund Growth Over Time (in US Dollars)
This is the computed increase in your 403b fund as you grow older. 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 is how much you will have in your 403b fund when you retire, provided if you make annual contributions and achieve your target rate of return, and your employer consistently matches funds at the rate you’ve given.
Salary at Retirement Age (US Dollars/ Year)
This is your predicted salary as you reach the retirement age you’ve specified previously.
Annual Income from 403b (US Dollars / Year)
This is the retirement income per year you can expect to get from your 403b account. 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 certainly comes in handy for this and all other related calculations.