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For modern families juggling career demands, inflation, and the rising cost of living, figuring out how much to save for college and retirement is becoming a strategic balancing act. As tuition continues to climb, and life expectancies increase, parents are asking the hard question: Can I afford to help my kids without sacrificing my own future?
The answer isn’t simple. But tools like 529 college savings plans have made it easier for families to plan if they start early and stay consistent. Still, even with these tools, millions of Americans are behind, especially those in the HENRY demographic “High Earners, Not Rich Yet” who often make too much to qualify for aid but not enough to fund both college and retirement fully.
The Real Cost of College in 2025
It’s no secret that college has become dramatically more expensive over the years. In 2025, the average cost of attending a four-year public university (including tuition, fees, room, and board) can reach over $100,000 for in-state students and double that for private institutions.
For families with two or more children, these numbers quickly become overwhelming. And while student loans are available, parents are increasingly trying to minimize debt for their children by saving ahead enter the 529 plan.
What is a 529 Plan and Why Use It?
A 529 plan is a tax-advantaged investment account specifically designed for education expenses. Contributions grow tax-free, and withdrawals used for qualified expenses like tuition, books, and housing aren’t taxed either.
It’s one of the most efficient ways to save for college, yet many families don’t start early enough or contribute regularly. According to recent data, the average 529 plan balance is under $30,000 far below what most families will need when college time arrives.
The Trade-Off: College vs. Retirement
Here’s where the tension begins. Every dollar you put into a 529 plan is a dollar you’re not putting toward your retirement. And while college lasts four years, retirement can last twenty to thirty. Financial advisors consistently warn: "You can borrow for college, but you can’t borrow for retirement."
So, how should families approach the dilemma?
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Prioritize retirement first – Make sure you’re on track with 401(k) or IRA contributions before heavily funding a 529.
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Start small, but early – Even modest monthly contributions to a 529 can grow significantly over time, thanks to compounding.
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Get family involved – Grandparents or relatives can gift money directly into 529 accounts, which also helps with estate planning.
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Use state-specific benefits – Many states offer tax deductions or credits for contributions to their own 529 plans.
One Family’s Balancing Act: Lessons from Alaska
Take the example of a couple living in Alaska who recently went viral on social media for sharing their financial journey. They are both in their 30s, earn good salaries, and have two kids under five. Their goal? To fully fund their children’s future college tuition without delaying their retirement age.
They started contributing early and automated their savings, prioritizing $200–$500 per month per child, even during high inflation periods. While they acknowledge they may not cover 100% of tuition, their strategy is rooted in long-term consistency rather than perfection.
The result? Peace of mind and a growing 529 balance that keeps them motivated, not overwhelmed.
Are You a “HENRY”? Why It Matters
Many families find themselves in the so-called HENRY zone earning six figures, but still feeling financially stretched. These households often don't qualify for financial aid, but also aren’t building generational wealth at a pace that allows them to cash-flow college or retire early.
For these families, 529 plans offer a structured solution but only if paired with careful planning and realistic expectations. Investing too much in education can leave them vulnerable later. The trick is finding the balance between generosity and financial self-preservation.
Saving for college and retirement isn’t a one-size-fits-all process it’s a dynamic puzzle that each family must solve based on their goals, income, and values. But by leveraging 529 plans wisely, starting early, and prioritizing both family and future, it’s possible to do both without losing sleep.
Because the goal isn’t just to afford college it’s to do it without compromising your dreams after the kids are grown.
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