We’re naturalized Americans with no family in the US, so we don’t have anyone to ask what they’re doing. Also, advice about it online is remarkably inconsistent, ranging from like $20 a month to $2000 a month. I understand that it’s because it is strongly dependent on personal finance and priorities, and nobody’s going to have a straight answer for me, but still, I am interested, what is everyone else doing, and what is the thinking that landed you on that number?
Obviously, I have no idea what my kids will want to be, so I can’t use that as signal. Doctor? Painting artist? Woodworker? Nobel-prize-winning physicist? Beats me!
Some details about my personal situation: I don’t really have any major financial goals except for this and my retirement (I own my house and it’s paid for). So, I can put some decent money in there, but this is competing with my retirement funds, and it’s important to me that I don’t depend on my own kids during my old age, so I don’t want to overdo it.
A thought I had, but I don’t know if it’s relevant: with the recent ability for kids to convert to a Roth IRA up to $35k with no penalties if they don’t use the funds, has that become the new golden number?
Unless your kids are getting close to college right now, I would not put much faith in any specific program being present in the future. Those sorts of deals tend to come and go with the political tide.
Personally I put less and less emphasis on colleges with each passing year of life. Unless your child has aspirations to be a mover shaker or aims for a highly specialized field, just about any accredited bachelor's degree in the right field will work for them, ergo a cheap online/community college will get the job done, and possibly also fast if they're a strong student.
I'd put a modest sum in, perhaps around your number, and then subsidize each child based on their goals. You might nurture a child with strong entrepreneurial aspirations, in which case that 529 is probably not going to help them, whereas 30k in seed money could set them up for great success.
Teaching and nurturing a child early on in life will pay far greater dividends than a college fund ever will in any case. Giving them the tools to advance spectacularly and have a drive to achieve their goals is going to make any other obstacle surmountable.
Yeah, it’s all a game of chance. My feel is that the combination of legislative risk + risk that those funds would not match at all their plans is low-ish enough, lower than it was or I thought it was a few years ago, that it threw me over the fence now. I was firmly against getting 529s until recently (mostly because of my annoyance with scammy colleges, which is most colleges).
Ultimately I fully agree with everything you said. They will build their own projects and ambitions, and our role as parents is to build around to support those ambitions, whatever they are, that is what makes kids successful. In fact, my sudden interest in the 529 is exactly to that end, to be sure they get opportunity if their ambitions happen to be aligned with what 529s are helpful for, while being sure that it is not too harmful if they’re not aligned.
So what if they’re not aligned and they can’t use those funds in meaningful ways for their goals? Well, right now they can transfer it to a Roth; or transfer it to any family member. Those rules can change, but they’re more likely to be that way a while than they were a couple of years ago when those rules weren’t yet a thing; and even if they do change, I feel it is reasonably to expect that there will be similar-ish ways out, hopefully. Otherwise, they can use some of the funds to buy various roughly educational things, like computers and similar expenses. And otherwise, if it’s really terribly unaligned and the law changed so much that those funds are locked as heck, there’s always the possibility to cut our losses, and take them out paying the 10% penalty; but hopefully that won’t be needed, who knows.