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
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 started your 403b funding yet, you can 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 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)
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. 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 403b fund increase over time as you become 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 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 expected salary when you come to the retirement age you’ve previously indicated.
Annual Income from 403b (US Dollars / Year)
This is the retirement income you can expect your 403b account to give you annually. 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 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.