Saving for kids future/College: how do you think about mix of 529 and brokerage?
Hello - as part of chubbyFire, I’m seeking input on how people think about saving for kids college and future.
We have 2 kids under 3, so we have a long time horizon still. My wife and I are mid 30s, our FIRE timeline is loosely 52-55.
Our intention is to cover 100% of college costs for both kids.
*When saving for kids college, are you investing in 529s with the projected cost of in-state tuition or out of state / private school?*
My thinking is, if you put into 529 for “private school costs” but the go to in state, then you end up with too much money in the 529. I know there are ways to handle that (IRA, change beneficiary, withdraw and pay tax etc) but it still is more limiting.
So I’m thinking, you put into the 529 “enough for in state” and front load the investments (let’s say $1000 a month until kid is around age 8), then shift to using a standard brokerage account to save the money for “what if they go to private school?”
That way you’re still intentionally saving to cover any college outcome, but you have more flexibility and can use that brokerage money for anything, such as gifting a house down payment, a car etc.
*So, how are folks thinking about the way they plan and save for college tuition knowing that in state v out of state is such a large delta? *
Plus of course, what if your kid doesn’t want to go to college, college looks different in 15+ years etc
As it relates to FIRE, the amount we save for the kids now, impacts what we can invest for ourselves now (we max 401k, do backdoor Roth, other investments etc), and if we undersave in the 529 so we have to “fund” the out of state tuition from “our savings” that influences things.
Our current situation roughly:
Mid 30s, both working parents. No debt (other than house mortgage), $2.7M+ across brokerage, retirement accounts etc (not including my house in assets)
Thanks!