529 Asset Allocation as College Approaches

I'd leave the money invested in equities. I did that with my kids and it worked out fine. Kids were in college from 2016 - now. I have about 4 more years of college bills, and I am staying fully invested in equities. YMMV
My DS went to college in 2007 and We were 100% equities in his 529 plan. You know the rest of the story. We ended up footing the rest of the bill out of our savings. Fortunately he went to an in state school.
 
I put both of my kids 529 in the high school graduation date fund which gradually went from aggressive when they were in single digit age to basically money market/short term bonds at graduation date. The timing couldn't have been worse. My oldest daughter graduated high school in 2020 and the fund switched to mostly money market/short term bonds right at the bottom of the covid selloff. So she locked in losses there. Then the market went gang busters for the next 4 years and she didn't participate much in that gain. Also the first couple years the fed rate was 0 so all of her bond funds were paying very little. Then in 22 fed funds rate exploded, causing her to lose some money in those 'safe' bond funds.

My second daughter graduated in 2022 and had similar problems where the fund went to all money market/short term bonds when fed funds were at 0%, and then fed funds rate exploded and so she lost money in those 'safe' bond funds.

I'm not advocating any kind of strategy, just saying that even with the best of intentions, things can go to ****.
Agree, the market can work for you as well as against you, and the "lost" opportunity really sticks in one's craw. My view is having adequate funds available when you need them is the goal of a 529, and I managed those accounts to maximize that outcome.

To be more explicit about my situation, I ended up being overfunded in the 529s because the kids got scholarships, stayed in state, and earned the maximum benefit from FL's generous Bright Futures program. None of that was knowable when we put the money in before they were 5 years old. As a result, I was able to leave a not-small portion of their accounts in equities while setting aside sufficient Short Term $$ to cover their needs when enrolled.

When the first kid arrived, we had recently moved to FL on a corporate relo and expected to move back west soon. Funny how life works out - I've been in FL for 26+ consecutive years. Sometimes the stick that hits you is the "Lucky Stick", and one should humbly accept good fortune.

If you didn't get hit with a Lucky Stick and are close on funding, I stand by my recommendation to lock in the expected costs and not expose your hard-earned savings, dedicated to put a kid through college, to market risk. If you have more flex in your income/assets or get hit with the Luck Stick earlier in your kids' lives than I did, by all means take the risk.
 
I took/am taking an aggressive approach. Realizing that I would be underfunded by about 2 years for the offspring’s private college, I stayed 100% stocks with the idea that if the market tanked, it would take at most 4 years to recover so I would cash flow years 1-2 (instead of years 3-4) while the market (hopefully) recovered. If the market did not tank, I would use the 529 funds immediately and take money off the table by paying for the cost of attendance.

The one conservative thing I did was I was also paying for private high school tuition so when the rules change that allowed for $10K of 529 funds to be used for high school, I used that withdrawal for a couple of years and called that a shift in asset allocation (instead of going to bonds/MM/cash in the 529, I withdrew and used the $10K I would have paid in high schools tuition to buy equities in an after tax account).
 
Got a 9th and 7th grader as well. I'm 100% in VOO in 529, ESA, and Taxable accounts for both kids. 9th grader wants out of state and smaller school. Will suit both kids with special needs better, especially 9th grader.

So I guess we're in the exact same boat, do I move any money out of VOO? I haven't and wasn't planning on it. My thoughts were ESA drain first, then 529 drain down to $35k for Roth and leave taxable for DK house down payment.

Whatever we can't I'll use our income which unfortunately for us right now is limited. But we hvae 4 more years and a lot for us can potentially change. DH took a paycut almost 4 years ago for a startup. It's gone well and still is. But before he did, I made sure to fully fund college for both kids at that time because I had promised and I decided depending on where we came out on the other side then we'd see.

I figured if things went south investmentwise we would just pay out of our incomes. I think I won't be cashing out until I have to "reimburse" myself for tuition in 2028. Even if the market goes down i'll keep letting it ride.
 
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