Estimate your potential 529 plan savings for future education costs.
Projected Future Value
Understanding the 529 Plan Savings Calculator
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Named after Section 529 of the Internal Revenue Code, these plans offer potential tax benefits, such as tax-deferred growth and tax-free withdrawals for qualified education expenses. This calculator helps you project how your 529 plan contributions might grow over time and how much you might accumulate to cover college expenses.
How the Calculator Works:
The calculator uses a compound interest formula, adjusted for annual contributions and the time horizon until college. The core principle is to project the future value of your current savings and all future contributions, factoring in an assumed rate of return.
Years to College: This is calculated by subtracting the beneficiary's current age from the age they are expected to start college.
Future Value of Current Savings: The initial amount in your 529 plan grows over the years until college starts, compounded by the expected annual return. The formula used is:
FV = PV * (1 + r)^n Where:
FV = Future Value
PV = Present Value (Current Savings)
r = Expected Annual Investment Return (as a decimal)
n = Number of Years Until College
Future Value of Annual Contributions: Each annual contribution also grows with compound interest. This is calculated using the future value of an ordinary annuity formula:
FV = P * [((1 + r)^n – 1) / r] Where:
FV = Future Value
P = Periodic Payment (Annual Contribution)
r = Expected Annual Investment Return (as a decimal)
n = Number of Years Until College
Total Projected Savings: The sum of the future value of current savings and the future value of all annual contributions.
Estimated Total College Cost: This is calculated by inflating the estimated annual cost of college over the number of years the beneficiary will attend college, assuming a general inflation rate (though this calculator simplifies it by asking for an inflation-adjusted annual cost). For simplicity, this calculator assumes the provided "Estimated Annual Cost of College" is already adjusted for inflation and simply multiplies it by the number of college years. A more complex model might incorporate a separate inflation rate.
Inputs Explained:
Current Age of Beneficiary: The age of the child or student for whom the savings are intended.
Age When College Starts: Typically 18, but can vary.
Current 529 Savings: The amount currently invested in the 529 plan.
Annual Contribution: The amount you plan to contribute to the 529 plan each year.
Expected Annual Investment Return (%): The average annual rate of return you anticipate from your investments within the 529 plan. This is an estimate and actual returns may vary.
Estimated Annual Cost of College (Inflation-Adjusted): The projected cost for one academic year of college, accounting for tuition, fees, room, board, and other expenses, and ideally reflecting future inflation.
Number of Years in College: Typically 4 years for a bachelor's degree.
Example:
Let's consider Sarah, who is currently 5 years old. She plans to start college at age 18, meaning there are 13 years until college (18 – 5). Her parents have already saved $10,000 in her 529 plan and plan to contribute $5,000 annually. They expect an average annual investment return of 7%. They estimate that the cost of one year of college will be $35,000 (inflation-adjusted).
Years to College: 13
Current Savings: $10,000
Annual Contribution: $5,000
Expected Annual Return: 7% (0.07)
Estimated Annual Cost of College: $35,000
Years in College: 4
Using the calculator with these inputs:
The Future Value of Current Savings ($10,000) would grow to approximately $23,845.
The Future Value of Annual Contributions ($5,000/year for 13 years) would grow to approximately $93,174.
Total Projected Savings would be $23,845 + $93,174 = $117,019.
The Total Estimated College Cost for 4 years would be $35,000 * 4 = $140,000.
This example shows a projected shortfall of $22,981 ($140,000 – $117,019), indicating that Sarah's parents might need to increase their annual contributions, seek higher returns (with associated risks), or plan for other funding sources.
Disclaimer: This calculator provides an estimate based on the inputs provided and assumes a consistent rate of return. Investment values can fluctuate, and actual college costs may differ. It is recommended to consult with a financial advisor for personalized guidance.
function calculate529Savings() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var collegeAge = parseFloat(document.getElementById("collegeAge").value);
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var expectedAnnualReturn = parseFloat(document.getElementById("expectedAnnualReturn").value) / 100; // Convert percentage to decimal
var annualCostOfCollege = parseFloat(document.getElementById("annualCostOfCollege").value);
var yearsOfCollege = parseFloat(document.getElementById("yearsOfCollege").value);
var validationErrors = [];
if (isNaN(currentAge) || currentAge < 0) validationErrors.push("Current Age must be a non-negative number.");
if (isNaN(collegeAge) || collegeAge < 0) validationErrors.push("College Age must be a non-negative number.");
if (isNaN(currentSavings) || currentSavings < 0) validationErrors.push("Current Savings must be a non-negative number.");
if (isNaN(annualContribution) || annualContribution < 0) validationErrors.push("Annual Contribution must be a non-negative number.");
if (isNaN(expectedAnnualReturn) || expectedAnnualReturn < 0) validationErrors.push("Expected Annual Return must be a non-negative number.");
if (isNaN(annualCostOfCollege) || annualCostOfCollege <= 0) validationErrors.push("Annual Cost of College must be a positive number.");
if (isNaN(yearsOfCollege) || yearsOfCollege <= 0) validationErrors.push("Number of Years in College must be a positive number.");
var yearsToCollege = collegeAge – currentAge;
if (yearsToCollege 0) {
alert("Please correct the following errors:\n" + validationErrors.join("\n"));
document.getElementById("result").style.display = "none";
return;
}
var futureValueOfCurrentSavings = 0;
if (expectedAnnualReturn > 0) {
futureValueOfCurrentSavings = currentSavings * Math.pow(1 + expectedAnnualReturn, yearsToCollege);
} else {
// If return is 0 or negative, savings don't grow (or shrink)
futureValueOfCurrentSavings = currentSavings;
}
var futureValueOfAnnualContributions = 0;
if (annualContribution > 0) {
if (expectedAnnualReturn > 0) {
futureValueOfAnnualContributions = annualContribution * ((Math.pow(1 + expectedAnnualReturn, yearsToCollege) – 1) / expectedAnnualReturn);
} else {
// If return is 0, it's simply contributions * years
futureValueOfAnnualContributions = annualContribution * yearsToCollege;
}
}
var totalProjectedSavings = futureValueOfCurrentSavings + futureValueOfAnnualContributions;
var totalEstimatedCollegeCost = annualCostOfCollege * yearsOfCollege;
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
var resultMessagePara = document.getElementById("result-message");
resultValueDiv.innerHTML = "$" + totalProjectedSavings.toLocaleString(undefined, { minimumFractionDigits: 0, maximumFractionDigits: 0 });
resultMessagePara.innerHTML = "Estimated total cost for " + yearsOfCollege + " years of college: $" + totalEstimatedCollegeCost.toLocaleString(undefined, { minimumFractionDigits: 0, maximumFractionDigits: 0 }) + ".";
if (totalProjectedSavings >= totalEstimatedCollegeCost) {
resultMessagePara.innerHTML += "You are projected to have enough saved to cover the estimated costs!";
} else {
var shortfall = totalEstimatedCollegeCost – totalProjectedSavings;
resultMessagePara.innerHTML += "Projected shortfall: $" + shortfall.toLocaleString(undefined, { minimumFractionDigits: 0, maximumFractionDigits: 0 }) + ". Consider increasing contributions or adjusting your savings strategy.";
}
resultDiv.style.display = "block";
}