How to start saving for college at any age

You make sacrifices for your kids—skimping on sleep, rearranging work schedules, driving to your 3,000th soccer game. When it comes to putting them through college, you may be tempted to keep that tradition going by putting more into their savings accounts than your own.

But minimizing retirement funds in favor of college accounts may backfire in the long run. Your kids may get the college degrees they want, but it’s possible they’ll be faced with supporting you later in life if your retirement savings aren’t enough to cover your living expenses.

Think small and start early

When you start saving for college early on, your money has more time to increase through a process called compounding. That means the money you invested starts generating its own earnings, and that grows more and more over the years.

The same goes for retirement accounts. Compounding can turn regular, seemingly small contributions into larger sums over time. As your amount increases—in both college savings and retirement funds—it earns more and more.

That’s why financial experts urge everyone to start savings plans as early as possible. For college, that might mean setting up an account when your child is still a baby. For retirement, it’s advised to start tucking money away from a first job onward.

Consider a 529 plan

With your retirement plan in place and receiving regular contributions, you can begin saving for college—not just for your kids, but maybe for yourself as well, or for other relatives or friends who are considering college. Education-specific accounts make it easy to get tax benefits and cover expenses at the same time.

One of the most popular is a 529 education savings plan. These programs are handled by mutual fund companies and are backed by states. Most of these plans are sold directly to consumers like you, so you don’t need an investment advisor to buy one. Check the rules on participation—some states limit investment to those who live there, but that’s not the case for all of them.

Tax benefits of a 529 plan

Compared to a traditional savings account, or even an investment account, a 529 plan offers a number of advantages for tax breaks and higher-education expense coverage.

Depending on the state you live in, you may be able to deduct 529 donations on your state tax return. Also, you’ll only pay federal or state taxes on your 529's earnings if you use the money for something other than certain expenses for higher education. Even then, you won’t pay those taxes until you actually make a withdrawal.

One more big tax benefit is that contribution maximums are higher, unlike more limited max-out amounts like you’d find with 401ks or HSAs. As of 2025, you can contribute $19,000 per year (up to $38,000 for a married couple) without paying gift taxes. Or, you can contribute up to $95,000 (up to $190,000 for married couples) for a one-time gift within a 5-year period without needing to pay gift taxes.

More 529 advantages

In addition to tax benefits, a 529 plan lets you have a lot of control over your account. You can determine when to withdraw funds for education expenses, which costs to cover—such as tuition, books, and room and board—and how much to contribute.

If your child is a dependent, 529 accounts are considered your assets, so that can lessen the impact on financial aid packages.

You also have the choice of putting your money in an age-based option, which automatically invests in an asset mix based on your child’s age. That asset mix is shifted as your child ages, to maximize investment returns.

Plus, you can get your money back if you need the money for other reasons, or your child skips college and decides on another path. Keep in mind, though, that you may have to cough up a penalty tax—10 percent—on your earnings (but not your contributions), along with state and federal income tax. If you meet certain criteria, you may have the option to roll some 529 savings to a retirement account called a Roth IRA. You can do this without paying taxes or fees.

You can also prevent having to pay those penalties by leaving the funds in the account in case your child, yourself, or other family members want to use it for education down the line.