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 several types of 403b calculators these days, but they work in generally the same manner and call for generally the same information to be used in the calculation.
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 yet started funding your 403b plan, then 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. 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)
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, enter the percentage here. Otherwise, then enter zero.
Employer Maximum (Percentage of Salary)
There are employers that only match up to a specific percentage of their employee’s salary. If your employer has a maximum applying to their match, then that amount should be entered here. Employer matches are currently limited at 6%.
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 increase in your 403b fund as you grow 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 estimated salary upon reaching the retirement age you’ve earlier specified.
Annual Income from 403b (US Dollars / Year)
This is the retirement income you can expect your 403b account to give you annually. 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 part of your salary upon retirement age that could your 403b funds can replace. As a rule of thumb, all sources of retirement income have to replace 70% to 80% of your final pay. A 403b calculator sure comes in handy for this and all other related computations.
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