Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.

Taylor Tepper

Q: Are 401(k) and 529 funds the safest place to save for retirement and college? The fluctuations in the market today, and also living through 2009, makes me concerned the money I am saving won’t actually be there.

Saving for retirement and paying for college are two of the biggest jobs you’ll have as an adult.

Unfortunately, a 401(k) and a 529 savings plan are really more about taxes than risk. In a 401(k), some of your pre-tax paycheck goes into an account that generally invests in stocks and bonds. The money accumulates tax-free, and then you pay income taxes when you start withdrawing the money, which usually happens when you're in your sixties.

In a 529 plan, you take some of your federally taxable paycheck and invest in stocks and bonds. That money grows tax-free, and you can withdraw it tax-free for college expenses.

None of this protects you from the ups and downs of the market. You’ll still invest in stocks and bonds, which can be terrifying given the market’s recent downturn.