If you currently have money set aside, it will hopefully grow to a significant amount over the same period of time that college costs inflate. Thus, in figuring your real shortfall, and in turn what you need to save each year, you'll need to figure out how much you’ll already have.
We use a multiplier similar to the one used in the last step to calculate the future value of your current investments. For example, if the same student with fifteen years until college has $5,000 in their college account, it should grow to approximately $15,850 ($5,000 multiplied by 3.17).
Years Until College Multiplier
1 = 1.08
2 = 1.17
3 = 1.26
4 = 1.36
5 = 1.47
6 = 1.59
7 = 1.71
8 = 1.85
9 = 2.00
10 = 2.16
11 = 2.33
12 = 2.52
13 = 2.72
14 = 2.94
15 = 3.17
16 = 3.43
17 = 3.70
18 = 4.00
19 = 4.32
20 = 4.66
21 = 5.03
22 = 5.44
23 = 5.87
24 = 6.34
25 = 6.85
*Assumes an 8% rate of return and rounded to two decimal places.
