Set up the 529.
First of all, the money doesn't ONLY need to be used for college. The plans have expanded to include everything from private K-12 education to including ANY post High School continuing education expenses. Can be vocational programs, trade schools, certificate programs, community colleges, etc. If a child gets a scholarship, you can withdraw the amount of the scholarship tax and penalty free.
In addition, as mentioned, 529 funds can be transferred to another familial relative (sibling, parent) without penalty, so the money can be used be a different person than initially set aside for. My husband is using part of our kids 529 money right now to pay for a Masters degree.
Also, if for some reason you don't end up using the money at all, you are only taxed/penalized on the EARNINGS portion of the money withdrawn, which isn't always a huge amount. The earnings get added to your taxable income for the year. There is also a 10% penalty, but very few people open 529s and never need the money for someone in the family. You are never taxed or penalized for withdrawing the amount you contributed. It's like a Roth IRA that way.
529 plans don't "expire." You can keep them open and earning money as long as you want. Your kids might need money later in life if they decide to go back to school.
And finally, if for some reason your kids become disabled prior to turning 22 and you have 529 funds they won't use, there is a special type of account called an ABLE account, that you can roll over the entire 529 into, tax and penalty free.
You will make more money invested in a 529 plan in an aggressive portfolio than you will EVER get in a taxable retirement account or anything like a CD. We opened 529 accounts when our kids were born and have only put in $100/month to each one and they are each sitting at $55,000, 17 and 15 years later, respectively. Younger DSs account was placed into the aggressive portfolio from the get go, while older son's was in a more moderate portfolio until I changed it after the 2008 crash into the most aggressive option.