Lessons Learned from Years with Finances

Defining Terms with Your 403b Calculator

A 403b calculator enables you to determine how much cash you can save in your 403b plan upon retirement. 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 the amount you’d like to contribute, or are currently contributing, to your 403b plan in terms of a certain 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, key in that 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 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 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 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 retirement income you can expect your 403b account to give you annually. 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. The rule of thumb is, all retirement income sources must replace 70% to 80% of your final pay. A 403b calculator sure comes in handy for this and all other related computations.