Defining Terms with Your 403b Calculator
A 403b calculator enables you to determine how much cash you can save in your 403b plan upon retirement. 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 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 yet started funding your 403b plan, then 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)
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, enter the percentage here. Otherwise, just enter zero.
Employer Maximum (Percentage of Salary)
Certain employers will only match up to a particular percentage of their workers’ salary. 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 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 403b fund increase over time as you become 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 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 predicted salary as you reach the retirement age you’ve specified previously.
Annual Income from 403b (US Dollars / Year)
This is the yearly retirement income your 403b account may be expected to provide you. 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 portion of your salary as you reach retirement age that could be replaced by your 403b funds. As a rule of thumb, all sources of retirement income have to replace 70% to 80% of your final pay. A 403b calculator certainly comes in handy for this and all other related calculations.