Successful Saving Starts With a Strategy

Step 1: Compare College Savings Options

Figuring out which college savings option is the best fit for your family isn’t always straightforward. Should you save in a 529 college savings plan account? A traditional savings account? A taxable brokerage account? A Roth IRA? The optimal choice may depend on your circumstances, budget, and goals; however, saving in a 529 plan offers distinct advantages. Some benefits are:

• You control the account and can change the beneficiary at any time, subject to IRS regulations.
• There are no income restrictions, and any earnings are tax-deferred.
• Distributions are exempt from federal income tax if used for qualified education expenses.

Step 2: Determine How Much to Save

Once you’ve decided which college savings option is right for you, you’ll need to figure out how much to save. Our College Savings Calculator provides customized projections and important information on how a tax-advantaged 529 plan can help. Estimate your future college expenses and create a plan to start saving.

T. Rowe Price Certified Financial Planners Judith Ward and Roger Young recommend the 50% rule of thumb. This rule advises that parents should aim to save enough to cover 50% of the published cost of college – which is around what most parents end up paying.

Step 4: Shape Your Strategy With Our Tools and Expert Insights

We are committed to helping families plan and save for future education expenses. Once you’ve opened an account, we provide a suite of tools and resources to help you evaluate, shape, and strengthen your strategy.