Defining Terms with Your 403b Calculator
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 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
On your 403b calculator, this is where you key in the amount you have in that account. If you haven’t begun funding your 403b plan, 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. 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 applying to their match, then that amount should be entered 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 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 estimated salary upon reaching the retirement age you’ve earlier specified.
Annual Income from 403b (US Dollars / Year)
This is the yearly retirement income your 403b account may be expected to provide you. Be aware that 403b fund withdrawals are taxable, and inflation will lower the purchasing power of these future dollars.
Percentage of Final Pay
This is the portion of your salary as you reach retirement age that could 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 definitely comes in handy not just for this but for all other related computations.
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