|Average annual inflation in college costs||6%|
|1 year of in-state public school||$23,410|
|1 year public-commute (no room and board)||$10,364|
|1 year of out-of-state public school||$37,229|
|1 year of private school||$46,272|
The per student contribution limit is $365,000. For a particular simulated savings scenario, the calculator multiplies $365,000 by the number of students entered into the scenario. When the simulated balance considered to be invested in non-taxable accounts exceeds this total, the calculator will consider all additional simulated contributions to be invested in a simulated taxable account.
|Risk Tolerance||General Time Horizon||Annual Compound Return Estimates|
|Short Term||1-3 Years||2.4%|
|Moderately Conservative||5 Years||4.4%|
|Moderately Aggressive||At Least 10 Years||5.7%|
|Aggressive||At Least 15 Years||6.2%|
Schwab has six investor risk profiles that vary in their expected rates of return and risk characteristics. Each of the six risk profiles (Short Term, Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive) are assigned a 'model portfolio' that has a specific target weight in each of the five asset classes used in this tool (Large-Cap Stocks, Small/Mid-Cap Stocks, International Stocks, Bonds, and Cash). The more aggressive model portfolios contain larger allocations to stocks and smaller allocations to bonds, resulting in higher expected returns and risk when compared to the more conservative model portfolios. The more conservative models contain higher allocations to bonds and smaller allocations to stocks, producing relatively lower expected returns and risk when compared to the more aggressive models.
Note that the tool does not use your actual brokerage holdings, positions, or current asset mix when conducting the analysis. The tool instead relies on the risk profiles and corresponding model portfolios that you select. It is critical to pick a model portfolio that best suits your true risk profile and to make sure your actual portfolio is invested and diversified in a manner consistent with the asset allocation chosen for use in the analysis. You should not select a risk tolerance or model portfolio based solely on its expected returns (e.g., choosing the Aggressive model just because it has the highest expected returns). You should pick the risk profile that is most appropriate for your goals, time horizon, and risk tolerance. Although higher expected returns will improve the estimated sustainability of a savings plan, often times, the increased risk will negatively impact the plan more than the increase return will improve it.
Why this matters: Your federal income tax bracket determines how much income tax you'll pay this year, which is a key consideration in deciding whether a Roth IRA conversion makes financial sense for you.
Your federal income tax rate is the starting marginal percentage at which conversion assets will be taxed. The calculator automatically calculates an estimated income tax rate based on the taxable income you entered, not including any potential conversion income which could move you into a higher tax bracket for the year you convert. For the most accurate result, make sure you've correctly entered your taxable income that is subject to ordinary income tax.
The calculator does not consider the alternative minimum tax (AMT). As converted funds are taxable, it is possible that the conversion amount could make you subject to the AMT. Be sure to consult your tax advisor.
|Single Filers||Married Filing Jointly & Surviving Spouses||Head of Household||Married Filing Separately||Federal Tax Rate|
|$415,051 or more||$466,951 or more||$441,001 or more||$233,476 or more||39.6%|