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 the age in years that you plan 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
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 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 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, put that percentage here. If not, then simply 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’s maximum applies to their match, put that that amount here. Employer matches are currently limited at 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 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 estimated salary upon reaching the retirement age you’ve earlier specified.
Annual Income from 403b (US Dollars / Year)
This is the retirement income per year you can expect to get from your 403b account. Note that 403b withdrawals are taxable, and inflation will weaken the buying power of these dollars in the future.
Percentage of Final Pay
This is the part of your salary upon retirement age that could your 403b funds can replace. All retirement income sources need to replace 70% to 80% of your final pay as a rule of thumb. A 403b calculator sure comes in handy for this and all other related computations.