Investment Simulator How much should you save in a 529 plan each month?
Compare $50, $100, $200, and $500 monthly contributions and set a college savings target that fits your budget.
If you put $200 a month into a 529 plan for 18 years, the account could grow to about $69,333 at a steady 5% annual return. That gives you a starting point. The amount to save depends on which costs you want to cover, how soon your child starts school, and what you can set aside without squeezing the rest of your budget.
In one r/personalfinance thread, a parent asked how much to save with 17 years to go. Some replies started with an affordable $50 or $100 a month. Others worked backward from the cost of a public college and treated living expenses separately. Another discussion asked what happens when a gift puts the 529 ahead of the family’s target. Both questions are easier to answer once you know what you want the account to pay for. Monthly savings discussion · Discussion about overfunding a 529
What could $50, $100, $200, or $500 a month become?
These examples start at $0 and use deposits at the beginning of each month, a constant 5% effective annual return, and 2.5% annual inflation. The projection excludes taxes and plan fees.
| Monthly contribution | Balance in 18 years | Buying power in today’s dollars |
|---|---|---|
| $50 | $17,333 | $11,113 |
| $100 | $34,666 | $22,227 |
| $200 | $69,333 | $44,454 |
| $500 | $173,332 | $111,134 |
Start with a budget for tuition and fees, then decide whether you also want to cover housing, food, books, and transportation. For example, our public in-state tuition scenario estimates $87,534 in future tuition and fees for four years. Under the same assumptions, about $253 a month would fund that specific target. Compare the future college bill with the future account balance so both figures are in the same dollars.
What if there’s money left over?
A 529 is a U.S. education savings plan. Earnings on distributions used for qualified expenses generally avoid federal income tax. State tax treatment varies. For a nonqualified withdrawal, the earnings portion is generally subject to federal income tax and an additional 10% tax, with exceptions. If your estimate falls or your child chooses a less expensive school, you can revisit future contributions. Depending on your circumstances, you may be able to change the beneficiary to an eligible family member or make a Roth IRA rollover that meets the federal requirements. Check the rules before moving the money. IRS guidance on 529 plans · SEC guide to 529 plans
Open the $200 monthly example in Investment Simulator. Enter what you’ve already saved and the years until school starts. Then try a smaller deposit or a lower return and see how much of the bill the account could cover.