# 457 Savings Calculator

A 457 can be one of your best tools for creating a secure retirement. It provides you with two important advantages. First, all contributions and earnings to your 457 are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your 457 account which can range from 0% to 100% of your contributions. The combined result is a retirement savings plan you can not afford to pass up.

## 457 Savings Calculator Definitions

Annual salary
This is your annual salary from your employer before taxes and other benefit deductions. Since your contribution and company match are based on the salary paid to you by your employer, do not include any income you may receive from sources other than your employer.
Percent to contribute
This is the percentage of your annual salary you contribute to your 457 plan each year. This calculator limits your contribution to 50% of your salary.
Annual contribution limits
Your total contribution for one year is based on your annual salary times the percent you contribute. However, your annual contribution is also subject to certain maximum total contributions per year. The annual maximum for 2020 is \$19,500. If you are age 50 or over, a 'catch-up' provision allows you to contribute an additional \$6,500 into your 457 account. It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit.

Current age
Age at retirement
Age you wish to retire. This calculator assumes that the year you retire you do not make any contributions to your 457. So if you retire at age 65, your last contribution occurs when you are actually 64.
Current 457 balance
The starting balance or current amount you have invested or saved in your 457.
Annual rate of return
The annual rate of return for your 457 account. This calculator assumes that your return is compounded annually and your deposits are made monthly. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2019, had an annual compounded rate of return of 13.2%, including reinvestment of dividends. From January 1, 1970 to December 31st 2019, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.7% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Employer match
An employer match is in addition to your annual contributions. It is based on a percentage of your annual contributions. This range can be anywhere from 0% to 100%.

For example, let's assume the employer matches 50% of the employee's contributions up to 6% of their salary. The employee earns \$100,000 per year and contributes 10%. The results would be:

• \$10,000 from the employee
• \$3,000 from the employer (which is 50% of \$6,000 or 6% of the annual salary)
• Total: \$13,000

Please read the definition for 'Employer maximum' for a detailed description of maximum employer matching contributions. It is important to note employer contributions do not affect the maximum annual deferral allowed to an employee. (The employee contribution plus any employer match cannot exceed the maximum allowed deferral.)

Employer maximum