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 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 you intend 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
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 how much you intend to contribute, or are contributing at present, to your 403b plan expressed as a percentage of your salary. The effect of decreasing or increasing your yearly contribution percentage will be seen on your 403b fund balance on your retirement.
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. 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 applying to their match, then that amount should be entered here. The present limit on employer matches is 6%.
Expected Annual Return on 403b Fund (Percentage)
This is your anticipated annual rate of return, which you intend to realize on your 403b fund from now to your retirement age.
403b Fund Growth Over Time (in US Dollars)
This is the computed rise in your 403b fund increase over time as you become older year after year. 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 the amount you will have in your 403b fund upon retirement, if you make contributions annually, you achieve your projected rate of return, and your employer keeps matching funds at the rate you’ve indicated.
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 yearly retirement income your 403b account may be expected to provide you. 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. 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.
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