Currently my wife and I both put 15% into a 401K with about 30 more years to retirement at 67. We have no major debt except a mortgage. Should we put more into our 401Ks, should we pay down our mortgage or should we start a 529 for our 2 kids college (oldest is 2.5 years)?
First, I applaud you for having so many things going well in your financial life! At 37 years old, you seem to be managing debt well, saving a good clip for retirement, and are thinking toward the future...all the great components of a solid financial plan.
Your question goes to prioritization, and where to focus first. I can't say specifically without knowing more about your situation as to the best next step, but want to share a few things to consider.
1. Retirement - I'd make sure you are on a good track to hit your retirement age goal at 67, with some flexibility to make work optional sooner as well. With a strong savings rate of 15%, you need to get some help from a financial planner, or even software tools that can help analyze if that saving rate will get you to your goal. You'll need to input your current balances, savings rate, as well as some projections on earnings that will be based on the mixture and risk/return of investments you hold. Also taken into account is your current income, and some assumptions about how much income you'll want to have in retirement. You may be better off than you think, and can devote some resources to #2 and #3 below.
2. Debt - FANTASTIC work clearing off all debts beside the mortgage. This frees you up to do other investing and saving for both now and the future. Everyone is a bit different, but I'd want you to at least have a plan in place to pay off the mortgage prior to retirement, although going quicker offers both emotional and financial benefits as well. I'd steer you toward addressing kids' futures before aggressively paying down the mortgage.
3. College - This is largely a personal decision on how much assistance you want to provide for kids' future, although starting sooner with a 2 year old is a fantastic time. You can estimate how much college may cost as well as how much money you might accumulate based on a given savings rate and investment mixture. Check out usaa.com/college for information on some of the types of accounts that are available. Assuming you are on track for #1 Retirement, it may be a good time to start putting money away for kids.
Finally, there's nothing keeping you from doing all three items at the same time, but I'd put it in the priority order of retirement, kids futures, and fully paying off the home.
Good luck, and keep up the good work!