Should You Use a Trump Account?
- Caitlin Muldoon
- Aug 13
- 3 min read
I may be ineligible for one of the new parent 'perks' of the OBBBA bill, but I'm not exactly kicking myself for missing out.
As part of the new OBBBA bill, the “Trump Account” promises a free $1,000 investment account for every baby born between 2025 and 2028. Win-win, right? ...But here's why I think this small gesture completely misses the mark, especially as new parents are navigating the daunting challenge of raising children in a country with increasingly out-of-reach housing, childcare, healthcare, higher education, and... retirement.
While any parent would gladly accept $1,000 for their newborn, the Trump Account represents a missed opportunity for meaningful retirement reform. Instead of addressing our fundamental savings challenges, it adds complexity to an already confusing system while failing to help those who need it most.
Yet Another Account in an Already Crowded Field 🤯
First: let's address how confusing it is to have yet another investing account. American families already navigate a maze of savings vehicles: traditional and Roth IRAs, 401(k)s, 529 education plans, HSAs, ABLE accounts, and custodial accounts. Each comes with different rules, contribution limits, and tax implications. Rather than simplifying this landscape, the Trump Account adds another layer of complexity.
A more effective approach would enhance existing frameworks. Policymakers could increase contribution limits for dependent-focused accounts, expand tax deductions for family savings, or streamline account types to reduce decision paralysis. Instead, we’re getting yet another account with its own unique rules and limitations.
A Tiny Seed in a Forest of Need 🌱
The $1,000 seed fund, while symbolically appealing, is insufficient given the scale of America’s retirement challenges. If this investment compounds at an annual rate of 8%, then after 62 years, it will be worth $118,106. This is 90% short of what the average American needs today to retire.
Our current social security program faces solvency issues that threaten future benefits (like, big reduction in benefits if major reform to social security doesn't happen soon). The same program spends billions in administrative overhead annually, while providing minimal individual benefit. That same funding could create more robust, well-capitalized accounts from birth if only it were deployed more strategically (the estimated $7.5 billion/year spent on the SSA would equate to over $2,000/child born in subsidized individual retirement accounts- just sayin').
Here's a crazy thought: instead of social security tax, require workers to automatically invest a portion of their paychecks into their individual retirement accounts. Even redirecting just the employee’s 6.2% contribution could generate serious wealth over decades. With average annual market returns of 7-8%, a worker could accumulate significantly more than Social Security alone provides.
What Real Reform Could Look Like 🦄
The idea of kick-starting investing accounts for our youngest citizens is a great thought, but it would go much further if it was coupled with some reform:
Streamlined Savings Architecture: Similar account types and clearer pathways for family savings would go a long way in reducing complexity, making financial planning for everyone in our country more accessible.
Enhanced Financial Education: Any new savings vehicles should come with comprehensive financial literacy programs, ensuring families can effectively use these tools. If you're reading this, you're already doing it right- but it'd be great if financial literacy was a topic we didn't have to seek out on our own.
On-going Matching: Provide incentives for individuals and employers to contribute to these accounts continuously, rather than sending the false message that a one-time gift at birth will lead to real transformation in adulthood.
Should You Use the Trump Account?
If you’re eligible for a Trump Account, by all means take the $1,000- free money is still free money. But don’t mistake this modest gesture for comprehensive retirement reform. The real work of fixing America’s savings crisis requires bolder thinking, better targeting, and policies that strengthen rather than weaken the broader safety net that working people depend on.
Don't Derail Your Existing Plans
The existence of a Trump Account shouldn't undermine your existing financial plan; the account is not better than a 529, or your 401(k) or IRA contributions. Take your free money, and continue on the course you chose to prepare financially for your future and/or the future of your kids or grandkids. Just don't forget the account is there, and- don't forget to check the box on your tax return in 2026 (since the treasury department is considering making this an opt-in enrollmen
t)!
Build Financial Literacy, and Put it Into Action!
