Practical and Helpful Tips: Finances

Understanding Your 403b Calculator and Terms

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 that you plan to retire.

Life Expectancy in Years

This is your life expectancy as you reach your predicted 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 haven’t begun funding your 403b plan, 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)

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)

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. Six percent is the current limit on employer matches.

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 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. 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. All retirement income sources need to replace 70% to 80% of your final pay as a rule of thumb. A 403b calculator definitely comes in handy not just for this but for all other related computations.