Understanding Your 403b Calculator and Defining Terms
A 403b calculator allows you to estimate the amount you can save in your 403b plan when you retire. There are many different 403b calculators today, but they work in pretty much the same manner and require pretty much the same information to be used for 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 that you plan 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 yet started funding your 403b plan, then just enter zero.
Annual Contribution to 403b (Percentage of Your Salary)
This is how much you intend to contribute, or are contributing at present, to your 403b plan expressed as a 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 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. If not, then simply 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 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 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 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 definitely comes in handy not just for this but for all other related computations.
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