Few Parents Using 529 Plans, Survey Shows

Few parents are using 529 college savings plans to plan for their children's education, according to a recent survey by Aegon Institutional Markets of The Hague. With a majority of the 500 respondents in the survey saying that principle preservation is very important, it appears that many parents are turning to conservative savings vehicles instead.

The majority, 61% of respondents, said they are using bank savings accounts as their main savings vehicle. Other popular vehicles included mutual funds (44%), U.S. savings bonds (37%), stocks (30%), money market accounts (23%), certificates of deposit (23%) and education IRAs (21%). Only 4% said they are using 529 plans.

Respondents' expectations for annual returns of 19% is also unrealistic, particularly since the average amount that respondents said they hope to save for each child for college is $80,400.

"Investors still haven't totally come down off the 90s stock market earnings boom," said Lynn Allen, a spokeswoman for Aegon.

"They have become more cautious," Allen said, noting that investors in last year's survey said they expected annual returns of 24%. "But their expectations haven't adjusted to what the market is actually doing," she said.

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Money Management Executive
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