Hi everyone, looking for a second pair of eyes on my college savings strategy. I’m a California resident and I’ve been aggressive with 529s early on, but now I’m wondering if I should pivot to maximize flexibility.

The Current State:

• Kids: Two children, aged 3 and 2.
• 529 Total: ~$158,000 (split roughly $79k each in separate accounts).
• Location: California (No state tax deduction for 529s, and high state capital gains tax).
• Investment: Aggressive/Moderate-Aggressive (Targeting ~7% returns).
• Retirement Saving: Maxed out 401k, after tax 401k (mega backdoor), backdoor (for me and stay at home spouse), HSA.

The Projections (in 15–16 years): Using a 4% college inflation rate and 7% market return:

• Projected Balance at Age 18: ~$220k for the 3yo and ~$235k for the 2yo.
• Estimated Public In-State COA (4 years): ~$165,000.
• Estimated Private COA (4 years): ~$480,000.

I have around 20k sitting in saving account as of now (beside emergency fund) and will have 3-5k per month till end of 2026 to invest.

The Strategy I'm Considering: I am debating stopping 529 contributions for now and putting this year's extra savings into a standard taxable brokerage portfolio (VTI/VXUS) instead.

My Logic:

1. Public is Covered: My current 529 balances already cover the projected cost of a top-tier Public University (like a UC) plus the $35k SECURE 2.0 Roth IRA rollover limit. But I am not fully covered for more expensive medial degrees.
2. The "Flexibility Premium": While CA tax is high, the "cost" of the tax on a brokerage account feels like a fair trade for the flexibility to use that money for a home down payment, a wedding, or my own retirement if they don't end up at an expensive private school. I know the 529 can be passed down to the grandkids but I am not sure if I prefer that over helping my kids with their down payment etc.
3. Overfunding Risk: I'm worried about "trapping" too much money in 529s if they get scholarships or choose the public route, especially with the 10% penalty on non-educational earnings.

My Questions for the Community:

1. Is it too early to stop 529 contributions at ages 3 and 2? Am I being too optimistic about a 7% return over 15 years?
2. For CA residents, does the lack of a state tax deduction make you more likely to favor taxable brokerage accounts once the "baseline" (Public school) is met?
3. If you were in this spot already having ~$80k per kid this early would you keep "superfunding" the 529 for the private school "what-if," or take the tax hit for the flexibility of a brokerage?
4. Overall how does one decide how much is enough in 529 with so many variables of future?

Appreciate any insights or "blind spots" you might see in this plan!