Now, instead of multiplying to calculate the amount of annual savings needed, you will divide. For example, using the chart below, you would divide your total shortfall by the divisor for fifteen years ($37,350 shortfall divided by 29.32).
This gives you a result of $1,273.87, which is the required annual savings to meet the $37,350 shortfall, assuming an 8% rate of return on your investments.
Years Until College Divisor
1 = 1.08
2 = 2.25
3 = 3.51
4 = 4.87
5 = 6.34
6 = 7.92
7 = 9.64
8 = 11.49
9 = 13.49
10 = 15.65
11 = 17.98
12 = 20.50
13 = 23.21
14 = 26.15
15 = 29.32
16 = 32.75
17 = 36.45
18 = 40.45
19 = 44.76
20 = 49.42
21 = 54.46
22 = 59.89
23 = 65.76
24 = 72.11
25 = 78.95
*Assumes an 8% rate of return and rounded to two decimal places.
