A 529 plan is a tax-advantaged savings vehicle designed to encourage saving for future education costs.
These plans are sponsored by states, state agencies, or educational institutions, and offer significant tax benefits.
Contributions may be deductible at the state level, and earnings grow tax-deferred. Withdrawals are tax-free
when used for qualified education expenses.
This 529 Plan Projection Calculator helps you estimate the future value of your savings based on your current balance,
regular contributions, expected investment growth, and the time horizon until the funds are needed. Understanding
these projections can help you set realistic savings goals and make informed decisions about your education savings strategy.
How the Projection is Calculated
The calculator uses a compound interest formula, adjusted for regular contributions, to project the future value of your 529 plan.
The core formula for the future value (FV) of an investment with compound interest is:
FV = PV * (1 + r)^n
Where:
PV = Present Value (your current 529 balance)
r = annual growth rate (as a decimal)
n = number of years
However, since you are also making regular annual contributions, we need to account for the future value of an annuity.
The projected future value (FV) of the 529 plan is calculated iteratively, year by year, or using a more complex formula that sums
the future value of the initial balance and the future value of the series of contributions. A common simplified approach for
annual contributions is to calculate the future value of each contribution compounded over the remaining years.
The calculator implements a year-by-year projection for accuracy, which is more robust for varying contribution schedules if extended.
For this calculator, we use the following logic for each year:
Calculate growth on current balance: current_balance * (1 + annual_growth_rate_decimal)
This new total becomes the starting balance for the next year.
The "Expected Annual Growth Rate" is a crucial assumption. It represents the average annual return you anticipate your investments
within the 529 plan to generate. This rate is an estimate and actual returns can vary significantly based on market performance
and the specific investment options chosen within your 529 plan.
Use Cases
Savings Goal Setting: Estimate if your current savings plan is sufficient to cover projected education costs.
Contribution Adjustment: Determine if you need to increase your annual contributions to reach your target.
Time Horizon Analysis: See the impact of starting savings earlier or later.
Investment Strategy Review: Understand how different assumed growth rates might impact your final savings.
Disclaimer: This calculator is for informational and projection purposes only. It does not constitute financial advice.
Actual investment returns may vary, and tax laws are subject to change. Consult with a qualified financial advisor before
making any investment decisions.
function calculate529Projection() {
var currentBalance = parseFloat(document.getElementById("currentBalance").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var expectedAnnualGrowthRate = parseFloat(document.getElementById("expectedAnnualGrowthRate").value) / 100; // Convert percentage to decimal
var yearsToCollege = parseInt(document.getElementById("yearsToCollege").value);
var resultElement = document.getElementById("result");
var resultSpanElement = resultElement.querySelector("span");
// Validate inputs
if (isNaN(currentBalance) || currentBalance < 0 ||
isNaN(annualContribution) || annualContribution < 0 ||
isNaN(expectedAnnualGrowthRate) || expectedAnnualGrowthRate < -1 || // Allow for negative growth, but not less than -100%
isNaN(yearsToCollege) || yearsToCollege <= 0) {
resultSpanElement.textContent = "Invalid Input";
resultElement.style.borderColor = "#dc3545"; // Red border for error
return;
}
var projectedBalance = currentBalance;
for (var i = 0; i < yearsToCollege; i++) {
// Add annual contribution at the beginning of the year (or end, depending on assumption)
// This model assumes contribution is made and then growth applies to the total.
projectedBalance += annualContribution;
projectedBalance *= (1 + expectedAnnualGrowthRate);
}
// Format the result to two decimal places
var formattedBalance = projectedBalance.toFixed(2);
resultSpanElement.textContent = "$" + formattedBalance;
resultElement.style.borderColor = "#28a745"; // Green border for success
}