Credit: Offering an average annual benefit of about $16,000, Social Security won't be enough for most of us. Image:
Offering an average annual benefit of about $16,000, Social Security won't be enough for most of us. Image:
The power of the 403b
Lest you assume that a 403b is just a boring account that will slowly fill with money, let's run through an example to change your mind. Imagine that, between you and your employer, your account is funded with $8,000 per year for 25 years. Imagine, too, that your money grows at an annual average rate of 8%.
If so, you'll end up with... $613,000! That can go a long way in retirement. If you invest mostly or completely in stocks, and average a 10% annual growth rate, then you'll end up with more than $865,000!
You can amass even more than that if you contribute more each year to your account -- especially in your early years, as early dollars have the longest time to grow. Remember -- the contribution limit is at least $18,000 -- and it is increased over time to keep up with inflation.
If one of your workplace's benefits is a 403b plan, contributing to it is probably a very good idea. And if you just have a 401(k), that's just about as good. It's up to most of us to save for our retirements.
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The article What's a 403b Plan? originally appeared on Fool.com.
Longtime Fool specialistSelena Maranjian,whom you canfollow on Twitter , has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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