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Anticipating College Costs
This table shows the estimated future cost of four years' tuition at four-year public and private colleges, based on a child's current age. Estimates are based on average total costs (including tuition, fees, and room and board) for the 2024-2025 school year and assume annual increases of 6.0%.
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Charting Future College Costs
College costs have been growing faster than inflation. This chart shows what the total costs might be to send your child to college. It assumes that college costs increase by 6% annually, which is in line with historical growth.
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Comparing the Rise in College Costs With Inflation
During the last 30 years, the average increase in tuition and fees at either a public or private college has generally risen more sharply than the average rate of inflation.
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How Much Do You Need to Save for College?
College costs have been growing faster than inflation. This chart shows what the total costs might be to send your child to college. It assumes that college costs increase by 6% annually, which is in line with historical growth. It also assumes that your college savings will earn 6% annually.
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Recent and Historical Average Annual Change in Home Prices in Selected Areas
Over the past 30 years, national home prices have grown 4.55% per year on average vs. 8.87% in the past five years. In recent years and in the long term, growth rates have varied widely from state to state and region to region.
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How Much Will You Need to Save for College?
Use this chart to estimate how much you will need to save annually to cover the cost of four years' tuition at public and private colleges. It assumes a rate of return of 6% and a 6% annual increase in college costs. The cost of attendance varies widely from one school to the next. This table uses national averages as an example.
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Rising College Costs
Given the rising cost of a college education, it could cost over $700,000 to send today's newborn to four years of private college by the time he or she turns 18.
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Maximum Sustainable Withdrawal Rates
How much could you afford to withdraw from your retirement savings? This chart may help you decide. It shows the maximum potential withdrawal rate for each 30-year period from 1926 through 2024 that would have allowed a nest egg to last for a full 30-year period. Generally, periods with strong investment returns and low inflation would have allowed your savings to last longer. While the average of all 30-year periods was about 6.6%, sustainable withdrawal rates could have been as high as 11.4% (1982-2011) and as low as 3.8% (1966-1995).
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The Effects of Starting Early and Compounding on Investments Over Time
Investor A contributed $20,000 over 10 years, then let compounding work for 20 more years. By December 31, 2024, the account grew to $204,127.
Investor B contributed $80,000 over 20 years double the contributions but ended with only $170,432.
Result: Starting early gave Investor A a $33,695 advantage, despite contributing much less.
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Contributing Early Helps Investment Results
Investing a smaller dollar amount over a longer time horizon could have a greater impact on the eventual investment result than investing a larger amount over a shorter period. Consider the values that could be achieved at age 65 by a 25-year-old who invested $75 a month and a 35-year-old who invested $100 a month, both earning the same rates of return. By starting to save earlier, the 25-year-old could have been able to accumulate more savings at age 65 despite investing less each period.
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A 1% Difference in Contribution Rates Can Make a Big Difference
This chart shows how a 1% difference in the rate of contributions could affect savings results over time. Consider the cases of two individuals, each earning $35,000 per year. Investor A contributes 4% of monthly earnings at the start of each month for 30 years; Investor B, 5% under the same terms. Both earn the same return, 6% per year compounded monthly. At the end of 30 years, Investor B could have $29,445 more than Investor A, even though Investor B's added contribution was only $10,500.
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30-Year Conventional Mortgage Rate and Real Home Prices ($)
This chart compares the 30-year conventional mortgage rate and real home prices ($) annually over the past 30 years.
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Retirement Savings: A Little Extra Could Make a Big Difference
How much you contribute to your retirement savings plan today can make a big difference in how much you have when you're ready to retire. Just upping your contribution from 4% to 6% could add close to $59,000 to your nest egg over 30 years, assuming a $35,000 salary, a 6% annual rate of return, monthly contributions, and tax deferral on contributions and earnings until retirement.
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