Our 403(b) Calculator offers a straightforward method to estimate the long-term growth of your retirement savings plan account by your desired retirement date.
Assessing your 403(b) plan's growth helps tailor your annual contributions to achieve your retirement goals.
Your 403(b) Calculator Inputs
To get started, we only require four fields:
- Current Annual Income: Your annual salary before taxes and benefit deductions.
- Years Until Retirement: The number of years until you intend to retire.
- Current Balance: The amount of money in your 403(b) account.
- Current Before-Tax Contribution: The pre-tax percentage of your salary you contribute annually to your 403(b) plan. You can select a percentage between 0 and 20%.
The Internal Revenue Service (IRS) contribution rules set 403(b) annual contribution limits, $23,500 for 2025. If you are 50 or older by year-end in 2025, you can make extra catch-up contributions, raising the 403(b) annual contribution cap to $31,000, with a catch-up limit of $7,500.
Advanced Inputs
Expanding the Advanced menu lets you input more details for a precise estimate, personalizing your results.
- Annual Salary Increases: Your annual salary growth rate until retirement.
- Pay Period Frequency: How often do you receive a paycheck? Choose from the following options: Weekly (once a week), Bi-weekly (every two weeks), Semi-monthly (twice a month), Monthly (once a month), or Annual (once a year).
- Annual Before-Tax Return On Savings: The expected annual before-tax return on your 403(b) retirement account.
Your plan administrator, typically your employer, selects the types of investment options available for your 403(b) plan and the investment companies or financial institutions responsible for managing the funds.
Your employer should be able to provide the historical average annual rate of return for your 403(b) plan over a specific period.
Your 403(b) investments carry risk, so past performance doesn't ensure future results. Your long-term investment return (including reinvestment of dividends) and principal balances of your investments may vary, meaning your shares could be worth more or less than their initial cost (loss of principal) upon redemption.
- Employer Match: The percentage of your annual 403(b) contribution that your employer contribution will match and add to your retirement account, up to a preset maximum.
- Maximum Employer Match: This is the annual maximum percentage of your salary that your employer sets as the limit for matching contributions to your 403(b) plan.
Understanding Your Results
Our Simple 403(b) calculator provides quick results about your Accumulated Plan Balance at Retirement, your Contributions (out-of-pocket costs), and your Employer Matching Contributions.
Steps to understand and act on the information:
1. Review Your Coverage Amount
- Understand the figure: The primary output is the estimated Plan Balance at Retirement, calculated based on your inputs.
- Assess adequacy: Compare this amount with your current and future financial obligations to help ensure it secures your retirement, supports your lifestyle, meets living expenses, and covers the planned duration of your retirement.
2. Examine Assumptions
- Check inputs: Reviewing data entry is vital, as minor errors can greatly impact the estimated retirement amount.
3. Consider Different Scenarios
- Adjust variables: Simulate various scenarios for your individual circumstances by adjusting input variables, like savings rates, on the calculator to see their effect on your estimated plan balance.
- Plan for contingencies: Consider the effects of unforeseen events like severe illness with medical expenses, an economic downturn, or changes in social security.
4. Consult a Professional
- Seek advice: 403b calculators are a useful starting tool, but you should always consult a financial advisor for investment advice. Advisors can refine your plan considering detailed preparation for your financial future, retirement tax implications, and personal circumstances.
- Review periodically: Regularly review and adjust your retirement plan to stay aligned with your goals, considering changes in your financial situation, future rates, or market conditions.
5. Decision Making
- Prioritize needs: If there's a gap in retirement assets based on the calculator's estimate and your research for a secure retirement, consider raising contributions or adjusting your investment strategy for higher returns.
What Could Your 403(b) Be Worth at Retirement?
Using our 403(b) Growth Calculator, let's run through a quick example. Let's assume the following:
- You are 35 years old right now.
- You have 32 years until you retire.
- You make $60,000/year and expect a 3% annual salary increase.
- Your current 403(b) balance is $15,000.
- You get paid bi-weekly.
- You expect your annual before-tax rate of return on your 403(b) to be 6%.
- Your employer match is 100% up to a maximum of 3%.
- Your current before-tax 403(b) plan contribution is 4% annually.
Applying these figures to this calculator returns a before-tax total value of your 403(b) retirement account of $679,290 in year 32 before you retire. During that period of investing in your 403(b), your cumulative contributions total $126,007, and your employer's cumulative contributions add up to $94,505.
This example illustrates the growth potential of investing 4% of your salary over several decades into your 403(b) while maximizing the benefit of your employer's matching contributions.
How Much Could Your 403(b) Grow if You Stop Contributing?
Now, let's examine what happens to your 403(b) when you stop contributing and your employer does not make matching contributions.
Using most of the same parameters as before, let's use our 403(b) Growth Calculator to see how much your 403(b) will be worth if you stop contributing at age 35 after you have already accumulated $15,000 in your account.
- You are 35 years old right now.
- You have 32 years until you retire.
- You make $60,000/year and expect a 3% annual salary increase.
- Your current 403(b) balance is $15,000.
- You get paid biweekly.
- You expect your annual before-tax rate of return to be 6%.
- Your employer match is 100% up to a maximum of 3%. (Because you stop contributing, your employer match amount is now $0 per year.)
- Your current before-tax 403(b) plan contribution is 0% annually.
What happens to your previous 403(b) balance of $679,290? It plummets to $102,088, $577,202 less than before. When you stop contributing to your 403(b) and have no employer-matching contributions, your total 403(b) balance in year 32 is 85% less.
Delaying your retirement savings, including 403(b) contributions, requires you to work harder and save more to meet your retirement goals.
Factors That Impact Your 403(b) Growth
Growing your 403(b) effectively relies on understanding key factors to make informed decisions about your retirement savings strategy. Here are the main factors that impact 403(b) growth:
Contribution Amount
- Employee Contributions: Regularly increasing your 403(b) contributions directly boosts account growth, significantly enhancing your retirement savings over time.
- Employer Matching: Employers often provide matching contributions up to a specific percentage, significantly enhancing your 403(b) when maximized.
Investment Choices
- Asset Allocation: The composition of stocks, bonds, and mutual funds in your 403(b) influences its growth potential and risk. A diversified portfolio helps manage risk and enhance returns. Asset allocation does not ensure a profit or protect against a loss in declining markets.
- Fund Performance: Fund performance varies; choosing those with strong track records and low fees can boost growth.
Investment Fees
- Management Fees: Fund managers charge an annual investment fee to manage investments.
- Expense Ratios: Selecting mutual funds or ETFs with lower annual fees can increase your returns by preserving your growth.
Market Conditions
- Economic Cycles: Your 403(b) performance is affected by the overall economic climate, including times of growth or recession.
Time Horizon
- Compound Interest: Investing early allows your 403(b) to benefit from compound interest, significantly boosting growth over time.
- Age and Retirement Timeline: The years until retirement influence your investment strategy. Younger people can usually afford to take more risks for potentially higher returns.
Inflation Rate
- Purchasing Power: Investing in options that outpace inflation is crucial to maintaining the purchasing power of your retirement savings.
Tax Implications
- Pre-Tax Contributions: Traditional 403(b) contributions are pre-tax, lowering your current taxable income, but are taxed when withdrawn.
- Roth 403(b): Contributions are made with after-tax dollars, but withdrawals are generally tax-free under certain conditions, benefiting those expecting a higher tax bracket in retirement.
Withdrawal Strategies
- Early Withdrawals: Withdrawing money from your 403(b) before age 59½ can result in penalties and taxes, reducing overall growth.
- Required Minimum Distributions (RMDs): Upon turning 73, you must take minimum distributions, affecting the growth of your remaining balance.
Behavioral Factors
- Consistency: Steady growth relies on regular and consistent contributions.
- Market Timing: Market timing can result in missed opportunities and losses; staying invested with a long-term strategy is usually more effective.
Loan Provisions
- 403(b) Loans: Certain plans permit loans from your 403(b), offering short-term liquidity but potentially harming long-term growth if not repaid promptly.
Learning these factors and their interactions helps enhance your 403(b) retirement savings growth and secures your financial future.
Benefits of Using a 403(b) Calculator
A 403b calculator is an important tool for planning retirement savings due to its numerous benefits. Here are the key advantages:
Personalized Projections
- Future Balance Estimates: A 403(b) retirement calculator can project your retirement savings growth over time based on your contributions, employer matches, and investment returns.
- Retirement Income Estimates: It helps you estimate the monthly or annual income you can expect during retirement, giving you a clearer picture of your financial future.
Contribution Planning
- Optimal Contribution Rates: By adjusting your contribution rates in the calculator, you can find the optimal amount to save each month or year to reach your retirement goals. Take advantage of additional contribution limits.
- Impact of Increasing Contributions: See how increasing your contributions, even small amounts, can significantly boost your retirement savings.
Employer Matching Maximization
- Matching Contributions: Understand how much your employer's matching contributions can add to your retirement savings and help ensure you take full advantage of this benefit.
Investment Strategy Assessment
- Rate of Return: Experiment with different rates of return to see how changes in investment performance might affect your savings.
- Risk Assessment: Assess how different levels of investment risk can impact your retirement savings and adjust your strategy accordingly with a financial professional.
Tax Implications
- Tax-Deferred Growth: Discover how a traditional 403(b)'s tax-deferred growth can boost retirement savings compared to taxable accounts.
- Roth 403(b) Analysis: Compare the benefits of a Roth 403(b), which offers generally tax-free withdrawals, to see which option might be better for your situation.
Inflation Impact
- Purchasing Power: Factor in inflation to understand how it will affect your savings and the purchasing power of your retirement income.
Scenario Analysis
- Different Scenarios: Run various scenarios, such as changes in salary, contribution rates, and retirement age, to see how other factors can influence your retirement savings.
- Market Volatility: Assess how market volatility might impact your savings and prepare for potential fluctuations in investment performance.
Savings Goals Setting
- Goal Achievement: Determine if your current savings strategy is adequate to meet your retirement goals or if adjustments are needed.
- Milestone Tracking: Set and track milestones to ensure you are on the right path to achieving your long-term financial objectives.
Retirement Age Planning
- Optimal Retirement Age: Experiment with different retirement ages to see how retiring earlier or later can affect your savings and retirement income.
Loan & Withdrawal Impact
- Loan Analysis: Comprehend how taking a loan from your 403(b) can impact your long-term savings and the importance of repaying it promptly.
- Early Withdrawals: Examine the penalties and tax impacts of early withdrawals and their potential to reduce your retirement savings.
Behavioral Insights
- Consistency and Discipline: Regular calculator use emphasizes the value of consistent savings and disciplined investing.
- Financial Awareness: Enhances understanding of how financial decisions impact your retirement prospects, enabling more informed and effective planning.
Sources
- 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000 - Internal Revenue Service (IRS). https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000
- IRC 403(b) tax-sheltered annuity plans - Internal Revenue Service (IRS). https://www.irs.gov/retirement-plans/irc-403b-tax-sheltered-annuity-plans
- Retirement Topics — Required Minimum Distributions (RMDs) - Internal Revenue Service (IRS). https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
