Fidelity 529 College Savings Planner
Estimate your potential 529 savings and projected college costs to see if you're on track to meet your education funding goals. This calculator helps you visualize the impact of your contributions and investment growth over time.
Understanding Your 529 College Savings Plan
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Sponsored by states, state agencies, or educational institutions, 529 plans are authorized by Section 529 of the Internal Revenue Code. While contributions are not tax-deductible at the federal level, your earnings grow tax-free, and withdrawals are tax-free when used for qualified education expenses.
Key Components of a 529 Plan
- Investment Growth: Your contributions are invested in various portfolios, similar to a mutual fund. The "Expected Annual Investment Growth Rate" in the calculator reflects the average annual return you anticipate from these investments. Fidelity, for example, offers a range of investment options from conservative to aggressive, allowing you to tailor your strategy to your risk tolerance and time horizon.
- Contributions: You can contribute to a 529 plan regularly (e.g., monthly) or with lump sums. The "Monthly Contribution" input helps you see how consistent saving impacts your future balance.
- Qualified Expenses: Funds can be used for tuition, fees, books, supplies, equipment, and even room and board (for students enrolled at least half-time) at eligible educational institutions, including colleges, universities, vocational schools, and even K-12 tuition up to $10,000 per year per beneficiary.
- Beneficiary: Each 529 plan has a designated beneficiary (the student). You can change the beneficiary to another eligible family member if needed.
The Impact of Inflation on College Costs
One of the most critical factors in college planning is inflation. The "College Inflation Rate" accounts for the rising cost of education over time. What costs $25,000 per year today could be significantly more expensive by the time your child starts college. This calculator projects future costs based on this inflation rate, providing a more realistic financial target.
How the Calculator Works
This tool takes your current savings, planned contributions, and expected investment growth to project your total 529 balance by the time your child enters college. Simultaneously, it inflates today's college costs to estimate the future expense of a four-year degree. By comparing these two figures, you can identify if you're on track, if you have a surplus, or if there's a funding gap you need to address.
Example Scenario:
Let's consider a child who is 5 years old, expected to start college at 18. You currently have $10,000 in their 529 plan and contribute $200 monthly. The current annual college cost is $25,000, with an expected college inflation rate of 4% and an investment growth rate of 7%.
- Years Until College: 18 – 5 = 13 years
- Projected Savings: The calculator will compound your initial $10,000 and your $200 monthly contributions over 13 years at a 7% annual growth rate.
- Projected College Costs: The $25,000 annual cost will be inflated by 4% for 13 years, and then for each of the four college years.
- Result: The calculator will then show you the total estimated savings versus the total estimated cost, highlighting any potential surplus or shortfall. This allows you to adjust your contributions or investment strategy as needed.
Using a 529 calculator like this is a crucial step in proactive college planning, helping you make informed decisions to secure your child's educational future.
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function calculate529Plan() {
// Get input values
var childCurrentAge = parseFloat(document.getElementById("childCurrentAge").value);
var collegeStartAge = parseFloat(document.getElementById("collegeStartAge").value);
var current529Savings = parseFloat(document.getElementById("current529Savings").value);
var monthlyContribution = parseFloat(document.getElementById("monthlyContribution").value);
var annualCollegeCost = parseFloat(document.getElementById("annualCollegeCost").value);
var collegeInflationRate = parseFloat(document.getElementById("collegeInflationRate").value) / 100;
var investmentGrowthRate = parseFloat(document.getElementById("investmentGrowthRate").value) / 100;
// Validate inputs
if (isNaN(childCurrentAge) || isNaN(collegeStartAge) || isNaN(current529Savings) ||
isNaN(monthlyContribution) || isNaN(annualCollegeCost) || isNaN(collegeInflationRate) ||
isNaN(investmentGrowthRate) || childCurrentAge < 0 || collegeStartAge <= childCurrentAge ||
current529Savings < 0 || monthlyContribution < 0 || annualCollegeCost < 0 ||
collegeInflationRate < 0 || investmentGrowthRate 0 && yearsUntilCollege > 0) {
var monthlyGrowthRate = Math.pow((1 + investmentGrowthRate), (1/12)) – 1;
var numberOfMonths = yearsUntilCollege * 12;
if (monthlyGrowthRate === 0) { // Handle case where growth rate is 0
futureValueOfContributions = monthlyContribution * numberOfMonths;
} else {
futureValueOfContributions = monthlyContribution * ((Math.pow((1 + monthlyGrowthRate), numberOfMonths) – 1) / monthlyGrowthRate);
}
}
var totalProjectedSavings = futureValueOfCurrentSavings + futureValueOfContributions;
// 3. Calculate Total Projected College Costs
var totalProjectedCollegeCost = 0;
var costAtCollegeStart = annualCollegeCost * Math.pow((1 + collegeInflationRate), yearsUntilCollege);
for (var i = 0; i < numberOfCollegeYears; i++) {
var costForYear = costAtCollegeStart * Math.pow((1 + collegeInflationRate), i);
totalProjectedCollegeCost += costForYear;
}
// 4. Calculate Funding Gap/Surplus
var fundingGap = totalProjectedSavings – totalProjectedCollegeCost;
// Display results
var resultHTML = "
Your 529 Plan Projection:
";
resultHTML += "
Years Until College: " + yearsUntilCollege + " years";
resultHTML += "
Estimated Total Savings at College Start: $" + totalProjectedSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
resultHTML += "
Estimated Total 4-Year College Cost: $" + totalProjectedCollegeCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
if (fundingGap >= 0) {
resultHTML += "
Projected Surplus: $" + fundingGap.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
resultHTML += "
Great news! Based on your inputs, you are projected to have enough saved to cover the estimated college costs.";
} else {
resultHTML += "
Projected Shortfall: $" + Math.abs(fundingGap).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
resultHTML += "
Consider increasing your monthly contributions or exploring other savings strategies to cover the estimated college costs.";
}
document.getElementById("result").innerHTML = resultHTML;
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