4 Lessons Learned: Tips

Understanding Your 403b Calculator and Defining Terms

A 403b calculator enables you to determine how much cash you can save in your 403b plan upon retirement. There are lots of 403b calculators nowadays, but they work in a rather similar manner and require rather similar pieces of information to be used in the 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 key in the amount you have in that 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 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. 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. The present limit on employer matches is 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 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 will be your 403b fund at retirement age, if you make yearly contributions to the accounts and attain your expected rate of return, and your employer keeps matching funds at your indicated rate.

Salary at Retirement Age (US Dollars/ Year)

This is your predicted salary as you reach the retirement age you’ve specified previously.

Annual Income from 403b (US Dollars / Year)

This is the retirement income per year you can expect to get from your 403b account. 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 as you reach retirement age that could 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 sure comes in handy for this and all other related computations.