The 529 Assumption

That Could Be Costing You More Than You Think

Do you need a 529 plan?

If everyone around you has one, the answer might feel obvious. But obvious isn’t always right.

William sat down with a husband and wife client in the DC area years ago. The husband was a professor. The wife had stayed home with the kids. They’d inherited a meaningful sum from her side of the family after her parents passed away in quick succession and it changed their lives in real and positive ways.

A nice house in the district paid for in cash.

Private school for the kids.

A brokerage account with more than a couple million dollars sitting in it, available for whatever they needed.

By any measure they were in a strong financial position. Yet, one day the wife sat down with William and told him she was worried.

She hadn’t saved anything for college.

The Laugh That Started a Conversation

William chuckled.

Not at her concern, but at the gap between what she had and what she thought she was missing.

The money sitting in their brokerage account could be used for anything:

  • college
  • a vacation home
  • retirement
  • living expenses
  • whatever they needed

It wasn’t earmarked for one purpose.

It was simply available.

Her response stopped him cold. All her friends were saving to 529 plans. So she felt like she should be too.

That moment captures something William sees regularly with clients at every wealth level.

Americans are conditioned by two powerful forces when it comes to saving. Keeping up with the Joneses and filling the standard buckets.

The Bucket Trap

The 401k bucket. The 529 bucket. The HSA bucket. The Roth IRA bucket. There’s a pervasive belief that a responsible financial life means all of those buckets are filled, and that if any one of them is empty something must be wrong.

But having money outside of those government encouraged vehicles doesn’t mean you haven’t saved.

It means you have saved differently.

And depending on your situation, saving differently might actually be the smarter move.

A 529 plan offers tax free growth on money used for qualified education expenses, which is genuinely valuable in the right situation. But it also comes with restrictions on how the money can be used, and those restrictions matter if your child’s plans change or if you need flexibility down the road.

A brokerage account doesn’t offer the same tax advantages… but it offers something a 529 can’t.

Complete flexibility.

The money can go toward college, or a business investment, or a down payment, or retirement, or anything else that comes up along the way.

Race Your Race

The right savings strategy is the one that fits your situation, your goals, and your timeline. Not the one your neighbors are using.

Do you need a 529 plan?

Maybe.

If you’re starting early, have a clear picture of education costs ahead, and want the tax free growth for a specific purpose, it can be an excellent tool. But if you already have substantial liquid assets, or if flexibility matters more to you than the tax treatment, there are other paths worth considering.

What matters isn’t whether you have the right buckets filled. It’s whether you have a plan that actually fits your life.

Those are two very different things.

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​[00:00:00] Years ago, I had a great client up in the DC area, and husband was a professor. She ended up staying at home, but they’d inherited some money. So they’d inherited some money from, from her side of the family. Parents were very successful investing in real estate, and unfortunately, had passed away in very quick succession, probably six or eight months of each other.

And so she inherited, you know, a decent sum of money. And it was awesome for them, right? They were able to live in DC in a way that they would not have been able to live otherwise. So, you know, they bought a, a nice house inside the district. Uh, not a fancy house, nothing crazy over the top or anything, but a nice house.

[00:01:00] Paid cash for it, and so didn’t have a mortgage, you know, did some minor up- um, upgrades and stuff to it. But again, nothing crazy, not extravagant. And went to meet with them from time to time, and we had, you know, lots of good conversations around, you know, their own financial independence, their own ability to live the life that they wanted to live with this new sum of money.

Their kids’, you know, education in DC, public school education in DC is kinda hit or miss, and so they ended up in private school. So all of those conversations, insurance, all that stuff, right? Really, really good conversations. Great planning discussions, uh, educated them a lot on investing and the ups and downs that come with it, right, the volatility and all those different things.

But I was there one, one week or one day, and she was like, “William, I’m, I’m worried.” And I was like, “What are you worried about?” She said, [00:02:00] “We haven’t saved anything for college.” And I kinda did the same thing I just did then, right, which is chuckle a little bit. And I said, “Well, wait a second. You’ve got more than a couple million dollars sitting in a brokerage account, and you can use it for anything you want to, right?

You can use it for, you know, um, to buy a new house. You can buy it to buy a vacation home. You can buy it for… You can use it for retirement. You can use it for college. You can use it for living expenses today, which you’re kinda doing already anyways, right? ‘Cause they’re using it to subsidize their, their life.

She said, “Yeah, but all my friends are saving to a 529 plan, so they’re saving for college.” I said, “That’s great,” but the reality is, is they’ve just… They’ve carved out that money. They’ve put it in a bucket, and that’s fine, but we don’t have to bucket our approaches, right? It’s a perfectly reasonable thing to do.

We get [00:03:00] tax-free growth and all the different things that come with it, and so a 529 plan can make sense in a lotta different ways, just like a 401plan can make sense or a Roth IRA can make sense. And so it was, um, it was humorous to me ’cause Americans are very conditioned on two things. One, what are the neighbors doing, right?

Keeping up with the Joneses. Well, if they’re putting money in a 529 plan, I should put money in a 529 plan. Um, and then filling the buckets, right? Like, I’ve gotta fill the buckets, right? I’ve gotta make sure I’ve got money in the 401. I’ve gotta make sure I’ve got money in the 529 plan. I’ve gotta make sure I’ve got the HSA account.

I’ve gotta make sure, like, all these things are getting checked. And sure, that’s a strategy, it’s… And, and it’s a good strategy in a lotta different instances. But just because you don’t have money in the buckets as they’re set up for you doesn’t mean that you’re not in a place where you can afford it.

It’s not in [00:04:00] a place where you haven’t saved for it. It just means you haven’t put it in a place that the government has encouraged you to put it into, and there are all kinds of reasons not to do it. Um, and there are all kinds of reasons to do it. Having the right strategy, the right plan, the right understanding in place is very crucial and critical.

So remember, next time you hear somebody saying, “I’ve got money here, I’ve got money here, I’ve got money here,” and you’ve only got money in your business or you’ve only got money here, don’t necessarily make that instant comparison. They’re doing their thing. You, um, you race your race, right? You be you, um, but know what you’re doing and how you’re doing it If you liked today’s video, hit the subscribe button down below, or better yet, just leave us a comment

ORIGINAL MEDIA SOURCE(S):

William Bissett: You Don’t Have to Save the Way Everyone Else Does. Here’s Why. | Portus Perspectives

Originally Recorded on August 20, 2026

Portus Perspectives: Episode 44