According to 2024 figures from EducationData.org, more than 16 million families now hold a 529 plan, and the average account balance sits near $30,000. If your child has grown and markets have shifted, it’s a good moment to revisit your 529 investment mix. A quick, once-a-year check can keep your college fund on track—without turning the account into a day-trading project.
When and how to revisit your 529 investment choices
You may have set up your 529 plan, picked a portfolio, and let it ride. The IRS allows only two investment changes per calendar year, so each tweak matters, according to Savingforcollege.com. Whether you use an age-based track that adjusts automatically or a static option such as Illinois’s Bright Start portfolios, a brief annual check keeps your college fund on course without turning it into a trading project.
Ask yourself: Has your child’s timeline or your comfort with risk shifted enough to justify one of those two permitted changes? If the answer is even “maybe,” keep reading. We’ll walk through a simple, calendar-based review that supports growth while lowering stress.
Start with a calendar, not the headlines
Markets move every day; your 529 doesn’t have to. Vanguard research shows that a once-a-year portfolio check strikes the right balance: reviews more often add little benefit, while waiting more than two years lets risk drift out of range (Investor.Vanguard.com).
Pick a date already on your calendar, such as your child’s birthday, the first week of summer break, or the weekend you collect tax documents. Plan materials for Illinois’s direct-sold 529 plan, Bright Start 529, recommend revisiting your investment mix at set points such as tax time or after major life changes like a new baby or a significant income change. Using those kinds of milestones alongside reminders like a birthday or school break gives you built-in prompts to check whether the account still lines up with your goals. Tying the review to a predictable event curbs the urge to react to headlines and keeps the focus on whether the current mix still fits your timeline and risk comfort.
Confirm the basics: time horizon and contributions
Two numbers drive every 529 review: years until withdrawals and dollars you add.
- Years to first tuition bill.
Fidelity recommends shifting at least 40 percent of a college portfolio into bonds and cash once you are within five years of enrollment (Fidelity.com). If you still have a decade or more, growth assets can do more of the work. - Monthly contribution track.
A four-year public university runs about $24,900 per year, including room and board, while a private college tops $58,600 (Fidelity.com). Many planners aim to cover about one-third of projected costs with a 529 and the balance with cash flow, aid, or loans. Run a free calculator on Fidelity, Vanguard, or Savingforcollege with your child’s age and today’s costs. If the gap widens, bump the monthly deposit before tweaking investments.
If those two checkpoints look solid, you can likely save one of your two allowed investment changes for another year.
Understand how your chosen portfolios behave over time
Think of 529 options in three buckets:
- Enrollment (age-based) tracks glide from roughly 80 percent stocks for a newborn to about 20 percent by senior year of high school. For instance, the Bright Start 529 College Savings Plan Portfolios automatically dial back stock exposure every two years as the enrollment date nears, making the mix more conservative without extra effort.
- Static risk portfolios (moderate, conservative, aggressive) freeze that mix; this setup can suit hands-on investors but turns risky if you forget to dial back.
- Single-asset funds (all-equity, all-bond, money market) move only with the market, not your child’s birthday.
Knowing which bucket you use shows whether the account is self-piloting or needs one of your two permitted tweaks this year.
Reasons you might want to adjust
Consider using one of your two permitted investment changes when:
- College is less than five years away and the account still holds more than 80 percent in stocks. Morningstar classifies anything above that level as “very aggressive,” a stance better suited to toddlers than teens (Morningstar.com).
- A market drop kept you up at night. If your loss tolerance was lower than you thought, moving part of the balance into a moderate or conservative track can help you stay invested.
- Your plan’s menu has improved. Morningstar’s 2024 report shows that 11 plans earned upgrades after adding lower-cost index funds or new age-based tracks (Morningstar Newsroom). Switching could trim fees and risk in one step.
Make the change for strategy, not headlines. Performance chasing usually backfires.
How to adjust without overcomplicating things
Think of each move as precious because the IRS allows only two investment reallocations per beneficiary each calendar year, according to Savingforcollege.com. Before you use one:
- Consolidate overlapping positions into a single age-based or balanced track; fewer line items make monitoring easier.
- Phase in the shift if market swings make you uneasy. For example, move 50 percent of the balance today and the rest after your next quarterly statement. One request counts as a single change.
- Redirect new money first. You can change the destination of future contributions as often as you like, and it does not consume a reallocation slot.
Save that second permitted change for an unexpected market move or a mid-year shift in risk tolerance. Purposeful beats reactive.
Balancing risk and opportunity as college nears
Once your student is within two years of enrollment, the goal flips from “grow as much as possible” to “don’t lose what you’ll need next semester.” Vanguard’s Target Enrollment 2024/2025 portfolio, for instance, now holds just 15 % stocks, 35 % bonds, and 50 % cash-like reserves. Treat that as a benchmark:
- First-year tuition and housing. Aim to have 50 % or more of this money in short-term reserves or high-quality bonds—assets that rarely swing more than a percentage point or two in a quarter.
- Later-year costs. Funds for junior and senior year can shoulder a bit more risk—say 30 %–40 % in stocks—because you still have time to ride out bumps.
- Coordinate with the rest of your portfolio. If your retirement accounts lean heavily toward equities, letting the 529 tilt conservative keeps your household risk in balance (and may spare you one of your two annual reallocation slots).
A calm, numbers-based check each year helps you glide into tuition payments without last-minute scrambling.
Shikha Negi is a Content Writer at ztudium with expertise in writing and proofreading content. Having created more than 500 articles encompassing a diverse range of educational topics, from breaking news to in-depth analysis and long-form content, Shikha has a deep understanding of emerging trends in business, technology (including AI, blockchain, and the metaverse), and societal shifts, As the author at Sarvgyan News, Shikha has demonstrated expertise in crafting engaging and informative content tailored for various audiences, including students, educators, and professionals.
