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Is Your 529 Packed?

Architecture of Wealth Show Notes:

Is Your 529 Plan Packed? Getting Your 529 Plan Ready For College.

(Please Forgive The Sound – We Were Outside For The Last Few Days Of Summer)

As schools starts, many parents are beginning to tap their 529s. Those that packed their 529s in advance decreased the risk in at least a portion of their portfolio at least a year or two out. But for many, the balance they counted on in December 2021 has dropped 15%-20%.

Managing college-funding risk can be more challenging than retirement because the runway and spend-down periods are shorter for college, 18 and 4 for college, and for retirement, 40 and 25, respectively.

If you have a sophomore or junior in high school, now is the time to develop a risk-reduction plan.

Don’t PANIC!

If your child is starting college now, there is no perfect solution in a down market, but here are some possible solutions and thoughts:

  • Use other assets and give time for risky assets to come back
    • Roth
    • Other 529 plan
    • Other accounts
    • Realizing the risk of staying invested
  • Dollar-cost sell, again realizing the market may not come back
    • If you don’t need the assets right away
    • A tuition payment plan set up with the school may allow you to spread out payments
  • Sell bonds or lower-risk assets first
    • Even the equities that haven’t gone down as much might be able to be sold

If you are in a target-date fund, be aware of the current risk and how it reduces risk over time.

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Mark Struthers

Chanhassen, MN 55317

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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