A bipartisan proposal in the GOP budget reconciliation package (what Trump has termed his “Big Beautiful Bill”) could help kickstart savings for the next generation – and perhaps encourage more young couples to have kids in the first place.
According to a report out last September, nearly a quarter of American millennials and Gen Zers don’t plan on becoming parents – exacerbating an already dire fertility crisis. More than half say they’ve delayed plans to have kids, and of those 86 percent cite finances as the primary reason why.
While having kids is itself expensive, many prospective parents also worry about whether they’ll be able to put their kids on strong financial footing heading into adulthood. A new type of investment account in the Big Beautiful Bill that proponents are calling “Trump accounts” could help alleviate that concern and perhaps give young people more confidence that their future children will have the funds they need to go to college, start a business, or buy their first home.
The version of the legislation which passed the House would specifically create a savings account for every new baby born in the United States and automatically deposit $1,000 into that account. Parents could then add up to $5,000 per year to the accounts, which would be invested in a stock index fund. The money would grow over time thanks to returns from the stock market, which have historically averaged an inflation-adjusted seven percent per year.
Once those kids grow up, they could draw on some of the money beginning at age 18. They could take out the full amount at age 25, with different tax advantages.
The accounts “will make it possible for countless American children to have a strong start in life,” President Trump said during a business roundtable meeting on Monday.
The proposal is part of a broader pro-family agenda from the Trump administration, which has previously floated baby bonuses as another means to promote family life. The Big Beautiful Bill, which can pass the Senate with just 51 votes instead of the normal 60, also increases the adoption tax credit and expands health savings accounts.
Major corporate CEOs have praised the “Trump account” concept. “Decades of research has shown that giving children a financial head start profoundly impacts their long-term success,” Dell CEO Michael Dell said. “With these accounts, children will be much more likely to graduate from college, to start a business, to buy a home, and achieve lifelong financial stability.”
“This is aligning every child in America with the upside of free markets and the benefits, and that is your Main Street agenda,” Altimeter Capital CEO Brad Gerstner added. “It makes America an ownership society again because all of those kids will see the benefit of compounding interest.”
Uber CEO Dara Khosrowshahi further called the accounts “a launchpad,” saying that they “put the unstoppable engine of compounding to work for our kids, building a future for them from day one.”
Indeed, the power of compounding growth could pay off handsomely for the next generation and put them on strong footing. “The compounded growth of an initial $1,000 investment at the time of birth, at an average annual return of 8 percent, would amount to nearly $4,000 by age 18, more than $10,000 by age 30, and over $148,000 by age 65,” Bankrate Chief Financial Analyst Greg McBride told Bankrate.
An account’s value could grow more since parents can also contribute $5,000 per year. If parents contribute the maximum amount every year until their child turns 18, assuming an average return of seven percent per year, the account would be worth $185,274.
As the Editorial Board of the Detroit News recently noted, “Just 14% of Americans have more than $100,000 in their savings account.” Trump accounts could help reverse that trend. Even the price tag for the accounts, estimated at $3.6 billion, pales in comparison to the economic growth potential they create.
Both conservative and liberal economists have promoted similar ideas over the past several decades. A 2010 paper by Duke University economist William Darity called for “baby bonds” to “eliminate the racial wealth gap.” Darity is no conservative – he supports trillions of dollars of spending on reparations. But even he recognizes the wisdom of starting kids off on the right financial footing.
A March report from the Milken Institute further argued for “Invest America” accounts, a proposal which mirrors the Trump accounts. It builds on an idea pushed by Kevin Hassett, Trump’s National Economic Council director.
“Based on studies of previous efforts to provide funded savings accounts for newborns or young children, the program should increase test scores, educational attainment, and earnings of those participating,” the think tank concluded.
The paper notes the idea goes back to at least 1999, when Democrats introduced the Kidsave Accounts Act, which would give newborns $1,000 plus an additional $500 contribution for the next five years. Similar proposals that year had both Democrat and Republican sponsors.
Trump Accounts are a common-sense step to helping the next generation succeed. By empowering Americans to save for retirement, college, and health expenses from literally the moment of birth, Trump accounts can ensure that every American child starts life with a financial foundation, fostering a financially savvy generation of savers and entrepreneurs.
Matt Lamb is an AMAC Newsline contributor and an associate editor for The College Fix. He previously worked for Students for Life of America, Students for Life Action, and Turning Point USA. He previously interned for Open the Books. His writing has also appeared in the Washington Examiner, The Federalist, LifeSiteNews, Human Life Review, Headline USA, and other outlets. The opinions expressed are his own. Follow him @mattlamb22 on X.
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