What Is the 529 College Savings Calculator?
This calculator is built for US families saving in a 529 plan — a tax-advantaged investment account designed for education costs. It projects how much your account could be worth by the time your child starts college, combining your current balance, ongoing monthly contributions, and expected investment growth. Because 529 earnings grow federally tax-free when used for qualified education expenses, the compounding effect modeled here can be especially powerful. Figures are estimates and assume a constant rate of return; actual market performance varies.
How to Use It
Enter your current 529 balance, the amount you plan to contribute each month, the number of years until college begins, and an expected average annual return (historically diversified portfolios have averaged roughly 5–7%). The calculator compounds monthly and shows the projected fund value plus a breakdown of how much came from your contributions versus investment growth.
The Formula Explained
We use the standard future value of a lump sum plus the future value of a series of deposits:
$$FV = P(1+r)^{t} + PMT \cdot \frac{(1+r)^{t} - 1}{r}$$
Here \(P\) is your starting balance, \(PMT\) is the monthly contribution, \(r\) is the monthly rate (annual rate \(\div\) 12), and \(t\) is the total number of months (years \(\times\) 12). The first term grows your existing savings; the second term grows each monthly deposit.
Worked Example
Suppose you have $5,000 saved, contribute $300/month, expect a 6% annual return, and have 18 years to go. With \(r = 0.005\) and \(t = 216\) months, \((1.005)^{216} \approx 2.9367\). The starting balance grows to about $14,684, and the monthly contributions grow to about $116,201, for a projected fund of roughly $130,885 — of which about $70,200 was contributed and $60,685 came from growth.
FAQ
What return should I assume? Many age-based 529 portfolios target 5–7% long-term; younger children with stock-heavy allocations may aim higher, but be conservative as college nears.
Does this include taxes or fees? No. 529 growth is federally tax-free for qualified expenses, but plan fees and market volatility are not modeled, so treat results as a planning estimate.
Can I use it for any savings account? Yes — the math is general future-value compounding, so it works for any account with regular contributions, though the tax benefits described apply specifically to US 529 plans.
