President Donald Trump announced an innovative policy within his “Big Beautiful Bill,” a measure that would create $1,000 savings accounts, known as “Trump Accounts” for each U.S. citizen born between Jan. 1, 2025, and Jan. 1, 2029, although the accounts may be renewed for future babies.
Cash for these Trump Accounts would be deposited into a private custodial investment account and grow tax-free until the child reaches adulthood. Parents, churches, charities, and employers can also contribute up to a combined $5,000 annually. At age 18, the young adult can access half the funds for college or skills training, to start a business, or toward a home down payment.
David Solomon, CEO of Goldman Sachs, visited the White House, alongside other business leaders, to praise the accounts. “This initiative gets at the core of binding those future generations to the benefits and the potential of America’s great companies and markets. Early childhood investments have far-reaching benefits,” Solomon said. “Our economy’s future vitality is dependent on young people understanding the power of investing for the long term.”
Solomon’s right. Trump Accounts are an intriguing idea for many reasons, including helping children begin saving immediately. It encourages financial literacy since people will be able to watch as the value of their accounts grow through the power of compounded interest.
The proposal requires that Trump Account money must be invested in a low-cost, diversified U.S. stock index fund or equivalent (for example, the S&P 500). A March report from Milken Institute forecasts that $1,000 invested in a broad equity index fund (without other contributions) would reach an average of $8,300 over 20 years. Hedge fund manager Brad Gerstner estimated that, with just $750 of additional deposits each year, these accounts could grow to $50,000 by age 18.
While paying for Trump Accounts raises questions, fiscal conservatives should prefer them over alternatives, including a bankrupt Social Security program. A 2024 estimate from the Social Security Board of Trustees projects the Social Security trust fund will become insolvent in 2033.
The bill’s Trump Accounts are also a better idea than the $5,000 “baby bonuses” proposed by then-vice presidential candidate JD Vance and endorsed by candidate Trump. Trump Accounts are one-fifth that size, and with 3.6 million births, the $5,000 baby bonus would cost about $18 billion, compared to Trump Accounts costing less than $3 billion.
While many parents might prefer a one-time $5,000 check or a tax refund, this type of “baby stimulus” often vanishes quickly. Trump Accounts cultivate a long-term horizon.
As my colleague Patrice Onwuka points out, Trump Accounts would democratize investing through their universality. Every U.S.-born child with parents who both have Social Security numbers with work authorization would qualify for Trump Accounts.
Children of all income levels and zip codes qualify, an improvement from the current only two out of three Americans owning stock and retirement accounts, according to Gallup polling. Stock-owning households are generally higher earners with more education. Just 38% of Hispanics, 52% of black Americans, and 28% of those earning below $50,000 own stock.
True to his campaign promises, Trump Accounts would shatter barriers between “elites” and the working class.
Unfortunately, millions of young people are not taught the principles of personal finance and economics in their schools, let alone tested on the subjects. According to the Council for Economic Education’s 2024 biennial Survey of the States, only 15 states require a semester-long course on personal finance. And 22 states do not require students to take a course in economics to graduate.
It’s no wonder then that about half of American adults fail basic financial literacy questions, with a 2% drop in the past two years, according to the Global Financial Literacy Excellence Center.
The Trump Accounts offer an incredible opportunity to teach the power of compound interest that goes beyond a theoretical classroom setting. Strict controls on how funds can be invested and when they can be withdrawn provide effective guardrails to ensure the children’s money is protected. The diversification requirement gives a real-world example to teach the fundamentals of investing for a child’s entire lifetime.
Trump Accounts hold great promise to instill economic literacy for children from all backgrounds. If signed into law, parents, teachers and other caring adults have a golden opportunity to empower children for a lifetime.
Carrie Sheffield is a senior policy analyst for the Center for Economic Opportunity at Independent Women’s Forum.
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