We have a four year old, and so far we only have about $200 saved in his 529. On one hand we want to start diligently saving in the account (We would like to fund a 4 Year In-State College), but on the other we feel we will pay for it out of our personal savings when the time comes.
We have always heard that you should save for your retirement before your children's education, since you cannot get a loan for retirement. Are we wrong to neglect to save in a 529, but fully fund both our IRAS and 401K plans?
I think it's extremely important to save for yourself first. Your child can always get a loan, scholarships, and more to help pay for school. But there is no loan that you can get for retirement.
Now, one thing I do suggest is that you look at putting any gifts he/she may receive growing up into a 529 plan versus just a savings account. That way the money can grow tax free and be used for education later.
Thank you for the reply. I guess specifically what I'm asking is once ive reached the max contributions in my 401K and IRA, should i put our extra savings into a 529 or into a taxable account in our names?
I think it all depends on your own goals. If saving for your children's college is really important to you, a 529 is the best way to save for college. If you have other goals, such as buying a house or will need a car soon, saving and investing in a taxable account makes sense.
Remember, it never has to be an either/or issue - balance works well too. Split the difference into both a 529 and taxable account if you have competing priorities and can't choose.