Saving early matters | NY 529 Direct Plan (2024)

FAQs

How much will I get if I save $100 a month for 18 years? ›

If you save $100 a month for 18 years, your ending balance could be $35,400. If you save $100 a month for 9 years, your ending balance could be about $13,900.

“I would not overfund your 529. At today's world, I would underfund your 529 … The higher ed landscape is going to change so much in the next 18 years as the student loan epic failure debacle unfolds,” Ramsey said. “They have been overcharging for too long, and it's come home to roost.

Average 529 Balance and More Savings Statistics

In June 2022, the average 529 balance was $25,903. In June 2021, the average 529 balance was much higher at $30,287.

If you've managed to save $300k successfully, there's a good chance you'll be able to retire comfortably, though you will have to make some compromises and consider your plans carefully if you want to make that your final figure.

It's easy to see why Americans don't embrace 529 plans. They often have limited investment options, high fees, complicated rules and anxiety-producing investment risks. All that said, the plans may ultimately be worthwhile for most families, as long as parents choose carefully. Focusing on fees is crucial.

Leave the account intact.

If your child is simply not sure about college or perhaps wants to delay applying, you can keep your 529 plan intact until the child does use it for qualified education expenses.

The Roth IRA also offers benefits in terms of available investments, unlike the 529, where investment choice is limited to funds that may not offer low-expense options. That's not the case with a Roth, which allows you to invest in nearly anything that trades on a public market.

Ideally, you should save at least $250 per month if you anticipate your child attending an in-state college (four years, public), $450 per month for an out-of-state public four-year college, and $550 per month for a private non-profit four-year college, from birth to college enrollment.

Surveys show that less than a third of parents are aware of 529 college savings plans. Even more shocking, however, is the number of children with 529 plans. Less than 18 percent of children under age 18 have a 529 plan.

Is a 529 plan good for wealthy? ›

These plans are attractive for wealthy families because they provide a way for a parent or grandparent to transfer much more money to a child than they would be able to without incurring gift taxes, Stokes says. Here's how he suggests maxing out a 529.

Investing as little as $200 a month can, if you do it consistently and invest wisely, turn into more than $150,000 in as soon as 20 years. If you keep contributing the same amount for another 20 years while generating the same average annual return on your investments, you could have more than $1.2 million.

Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.

The longer you keep your savings in the bank, the more you'll earn. If you save $100 monthly for an entire year, you'll have $1,200 in the bank.