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About 14 or 15 years ago when my old daughter was new born, I saved some money and put it into her 529 plan. About a year later, I wrote this blog post Some questions about 529 plan.
I haven’t put in much new money into her 529 plan since the early days, and for our younger daughter I did open an account for her, but I only put in couple hundreds dollars. I know I know: but it’s not because we favorite one daughter over another. It’s mostly because the money is tight, and I think 529 plan had one downside: the money can only be used for higher education (college etc.). For me flexibility is important as I was also thinking about retirement – I mean quitting my 9 to 5 job, and potentially do something else I would enjoy more: and potentially with a smaller paycheck too.
529 plan had some change to the rules recently. This is a big one: You can now transfer some 529 amounts to a Roth IRA.
Note I am late to the Roth IRA party too. Actually I opened a Roth IRA (my first) at Robinhood App last year (after the tax day). So my one year anniversary will come up this April 🙂
College cost, along with healthcare cost and housing are top three most expensive things Americans pay in last 20+ years. If there is anything we can alleviate or do, we should.
Traditionally I am under impression as in America 18 year old is considered adult (or beginning of adulthood), American parents share some college cost with the kids, in general or on average. I have seen two extremes: parents pay all; parents pay nothing. I also saw two kinds of students too: those who work hard and do their best; those who quit and had to drop their classes or get an “F”.
There is no one size fit all for the college cost (sharing cost, or not) among all the families. For me personally, I would try my best to pay off my kids (I have two) college cost (tuition plus living cost). Anything they earn: scholarship, part time job are icing on the cake.
That’s the main motivation factor behind my investing and uber driving (or other side gigs, ideally $500 an hour consulting will work out better 🙂
FAQs
Do I have to open 529 plan in my state (the state I live in)?
No. See this Answers to Questions about 529 Plans in Different States for longer answer.
What state plan do you recommend?
Ohio 529 collegeadvantage plan. Sorry show me state 🙂 Also you may want to look at the answer to the next question.
What are the best 529 plans in 2025?
Forbes thinks those are the best.
What if my kid is already in high school?
Better late than never in terms of saving. However, you do need to think about the investment options, your tolerance for risk and market volatility, etc. I know for my better half (my wife), she is pretty much risk averse, and hates volatility. So in those cases, you may consider the bond investment options vs. stock mutual fund.
