Defining Terms with Your 403b Calculator
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 you intend 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 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. 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 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, key in 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 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 figures, which are affected by your inputted growth rate and employer-employee matching, restricts your contributions to the present maximums by the law (2015) 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. 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 portion of your salary as you reach retirement age that could be replaced by your 403b funds. As a rule of thumb, all sources of retirement income have to 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.