Fidelity Study: Big Jump in 529 College Savings Accounts

Fidelity Study: Big Jump in 529 College Savings AccountsThere was a 22 percent increase in the number of new 529 college savings accounts opened during the first half of 2013, compared with accounts opened during the same time frame last year, according to the annual College Savings Indicator study from Fidelity Investments. If you’re saving money at the moment, get a little extra income from taking online surveys for money at clixsense.com.
Average 529 account balances are also up 8 percent from last year. A 529 Plan is an education savings plan administered by a state or educational institution. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996.
The Fidelity study, which surveyed families with children they intend to send to college, found that more families are starting to save earlier.
Fidelity said 69 percent of families report that they have started saving for college, an all-time-high since the inception of the study in 2007 (up from 66 percent in 2012 and 58 percent in 2007).
College savings contributions are up, with parents putting away an average of $5,000 last year.
However, many parents say they are still falling short of goals.
According to Fidelity: “When asked to grade themselves in terms of progress toward meeting their college savings goals, parents nationwide gave a passing grade of B-minus. While this is a passing grade, there is an opportunity to make some simple adjustments to help improve their college savings.”
The study also found that parents plan to pay for 62 percent of the total cost of college, but are only on track to cover just one-third (34 percent) of that savings goal.
An early mindset about college for both parents and kids is key. Parents who started talking about college with their kids before the age of 10 generated higher savings, Fidelty said.
Parents who first started talking to their kids about paying for college before the age of 10 were more likely to have started saving (93 percent), compared to 80 percent who first discussed the topic when their child was 10 or older.
Twenty-nine percent of parents report asking their kids to put aside some of their own savings for college, with an average starting age of 12.8. The earlier the conversations happen, the more likely they are to actually save.

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