Boomers Investing More In 529 College Savings Plans.

Although recent reports indicate that most parents and grandparents remain unschooled about the availability of state-sponsored 529 college savings plans, a new analysis of data from the Claritas Market Audit™ on how Baby Boomers are investing in the plans showed that the learning curve appears to be improving.

Overall, the analysis found that Boomer households with children across a wide range of income levels increased their investments in the savings plans significantly from 7.4 percent in 2003 to 10.2 percent in 2004. Data for this analysis was developed from over 175,000 interviews comparing household penetration of 529 plans among Baby Boomers (age 40-59) with children during those two years.

Not surprisingly, Boomer households with income producing assets (IPA) of $500,000-plus (the highest level as stipulated in the analysis) have shown the greatest incidence of investment at 19.6 percent in 2004, up less than one percent over 2003. However, the increases are greater at the lower levels of IPA. (IPA measures a household’s liquid financial assets and includes products like checking accounts, savings accounts, certificates of deposit, IRAs, mutual funds, retirement accounts, stocks, bonds, securities and other liquid assets. IPA does not include the estimated value of a household’s primary residence or vehicles.)

The analysis also showed that:

Household penetration of 529 plans among Boomer households with children and IPA of $100,000 to 500,000 grew from 11.4 percent penetration in 2003 to 16.5 percent penetration in 2004.

Boomer households with children and IPA of less than $100,000 increased their investments in the plans from 3.3 percent in 2003 to 4.5 percent penetration in 2004.

“The audit numbers clearly indicate that not just the most affluent Boomer families are recognizing that 529 plans can be a very flexible and beneficial investment vehicle, which underscores their growing appeal,” said Integras Customer Research Consultant Julie Simard.

Source: Market Audit Survey Data | Each data point represents rolling 4 Quarters of data | 8 Quarters total 2003 – 2004 | * SIGT (95%) Rolling 4 quarters ending Q4, 2003 vs. Rolling 4 quarters ending Q4, 2004
N = 32,224 Baby Boomer (40-59) households in the U.S. that have children