529 Account Growth Calculator
Estimate your college savings growth and future education costs.
Calculation Results
Estimated 529 Balance:
Total Estimated College Cost (4 Years):
Savings Gap:
How a 529 Account Calculator Helps Your Planning
A 529 plan is a tax-advantaged savings account designed to encourage saving for future education costs. Using a 529 account calculator is a critical step in financial planning, as it allows you to visualize how small monthly contributions compound over time while accounting for the rising cost of higher education.
Understanding the Math Behind Your Savings
This calculator uses two distinct formulas to give you a realistic picture of your financial situation:
- Savings Growth: We apply monthly compounding interest to your current balance and future contributions based on your expected annual return.
- Future Education Costs: We project the current tuition price forward using the tuition inflation rate (historically around 5%) to see what college will actually cost when your student is ready to enroll.
Example Calculation
If you start with $5,000, contribute $250 per month for 15 years, and earn a 6% return, your 529 account would grow to approximately $84,150. However, if tuition is currently $20,000/year and inflating at 5%, the 4-year total cost in 15 years will be roughly $188,000.
Key Benefits of 529 Plans
| Feature | Benefit |
|---|---|
| Tax-Free Growth | Investments grow without being subject to federal (and often state) taxes. |
| Qualified Withdrawals | No taxes are paid on withdrawals used for tuition, books, and room/board. |
| State Tax Incentives | Many states offer tax deductions or credits for contributions. |
| Flexibility | Funds can be transferred to other family members if the original beneficiary doesn't use them. |
Frequently Asked Questions
You can change the beneficiary to another qualified family member. Additionally, under the SECURE 2.0 Act, some unused 529 funds can be rolled over into a Roth IRA (subject to limits and rules).
While the stock market has historically returned around 10% annually, many 529 plans shift to more conservative investments (bonds/cash) as the student nears college age. A range of 5% to 7% is common for long-term projections.