Understanding Your 403b Calculator and Terms
A 403b calculator allows you to estimate the amount you can save in your 403b plan when you retire. 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 your age in years as you expect to retire.
Life Expectancy in Years
This is your life expectancy once you have reached your expected 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 started your 403b funding yet, you can just enter zero.
Annual Contribution to 403b (Percentage of Your Salary)
This is the amount you’d like to contribute, or are currently contributing, to your 403b plan in terms of a certain 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)
Majority of employers will match employee contributions to provide them benefits, and to encourage them to participate in the company’s program. If your employer does this, key in that percentage here. Otherwise, just 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 that applies to their match, that amount goes here. Employer matches are currently limited at 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 increase in your 403b fund as you grow older. 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 is the amount you will have in your 403b fund upon retirement, if you make contributions annually, you achieve your projected rate of return, and your employer keeps matching funds at the rate you’ve indicated.
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. Note that 403b withdrawals are taxable, and inflation will weaken the buying power of these dollars in the future.
Percentage of Final Pay
This is the portion of your salary at retirement age that may be replaced by your 403b funds. 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.
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