529 college saving plans: The cost of waiting

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[ "Ryan White, CFP®, CIMA®" ]
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Ryan White, CFP®, CIMA®, Senior Director of Product Management

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This is why investing for college should start as soon as possible.

Families often ask, “When should parents start saving for college?” The short answer is now — and here’s why:

 

Maria and Charles Ward have a five-year-old daughter, Emily. They plan on Emily attending an in-state public school, giving them 13 years to prepare for this expense. If the Wards start saving now, targeting 100% of Emily’s in-state public college tuition, they would need to save $667 per month. However, waiting to save for college will require them to save more each month for each year that they wait.

 

The earlier the Wards save, the longer they can benefit from compounding growth — which is particularly important given their relatively short investment horizon of around 13 years.

 

Our Price of Procrastination calculator can help determine how much more you would need to save to put your child through college.

 

 

Bar chart showing that if the Wards start saving for Emily’s college tuition today, they will need to save $667 per month. Waiting one more year will require an additional $69 per month; two more years will require an additional $149 per month; three more years will require an additional $242 per month; and four more years will require an additional $351 per month.

 

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