As the demand for college has driven the price of education to an all-time high, saving every single dollar that you can really make a difference. Many parents have already been stashing money away, with a large portion taking advantage of 529 savings plans. According to the article “How to protect your savings from market swings,” total investments in 529 reach an all-time high, surpassing 2016 by 16% while account the average account size also jumped by 13 percent.

This represents a growing trend of families utilizing a 529 savings plan versus traditional savings account because of the tax benefits. You can get a tax deduction or a credit for contributions, earnings obtain their growth based on a tax-advantaged basis, and when the money is withdrawn, as long as it is used for qualified education expenses, it is tax-free. However, as with any investment, there is always an underlying risk factor to consider.

Strategies for Saving

When your child is young, it makes sense to be aggressive with your strategy according to Brian Merrill, a certified financial planner, and partner at Tanglewood Total Wealth Management. You want to build as much saved money as you can when you are in no rush to use it. However, as your child starts to get older, and college is starting to loom on the horizon, then you want to shift your strategy from being aggressive to being more defensive.

The reason why you want to start adjusting your strategies is time. Time is another factor you have to consider. If the market suddenly shifts, causing you to take a hit on your investments, then you may not have enough time to recoup those losses before your child is heading off to college. Although right now the market is making the longest bull run in history, you should plan for the market to take a turn.

What Happens If Your Child Isn’t Going to College?

If you have been diligently putting money towards college for your child and you find yourself in a situation where they don’t need the money anymore, you have several options. The easiest pivot would be to change the beneficiary on the account. If you have another relative, including adopted and foster children, you can transfer the account to them. You can even save the account for your grandchildren.

If it looks like your student is not going to go to college, you can use it for K-12 private school expenses up to $10,000. If your child isn’t going because f a disability, you can transfer up to $15,000 into an ABLE account, which is a savings account for disabled individuals. If you have to take the money it in general for noneducational reasons, then you will have to pay income taxes on it as well as a 10 percent tax penalty. Although it sounds severe, it in reality only amounts to about 1 to 3 percent of the total amount according to Mark Kantrowitz, publisher of