President Donald Trump has said that his namesake investment accounts will be "one of the most transformative policy innovations of all time." The math suggests otherwise, with projected returns far exceeding the future value savers can actually expect.
A Barron's analysis found that the projected returns for Trump accounts provided by the administration aren't adjusted for inflation, resulting in estimates that are multiples higher than historical inflation-adjusted returns would suggest.
Trump accounts, set to launch on July 4, are tax-advantaged investment accounts created under the One Big Beautiful Bill Act to help families save for children from birth. Children born between 2025 and 2028 are eligible to receive a one-time $1,000 federal seed deposit when they enroll.
More than 6 million children were enrolled in the accounts as of early June, according to the Treasury Department.
Trumpaccounts.gov, the program's official website, presents projected account balances based on varying contribution levels and investment periods. Under its assumptions, a $1,000 government seed deposit grows to roughly $6,000 by age 18 with no additional contributions. Adjusted for inflation, however, the real value is nearly half that amount.
The accounts, described as a hybrid between a traditional IRA and a 529 savings account, allow for penalty-free withdrawals to be made starting at age 18 to pay for education, a first-time home purchase, or certain other expenses. According to the official website, a family saving for college can expect a projected balance of $271,000 after 18 years with $5,000 of contributions annually. But in inflation-adjusted dollars, the account would be worth about $100,000 less.
Jeff Judge, a founding partner at Chesapeake Financial Planners, says that discrepancy isn't a minor detail. Basing a college savings plan on nominal returns without accounting for inflation can leave families facing a meaningful funding gap when tuition bills come due.
"I had a client last year budgeting for her daughter's college fund using a similar nominal projection from her brokerage," Judge says. "We sat down and ran the inflation-adjusted version together, and the number dropped enough that we had to rework her monthly contribution. Better to find that out at year three than year 17."
And the loss to inflation only expands over time.
The Treasury Department, which oversees Trump Accounts, declined to comment about the projections provided on the website.
Still, advisors say the administration's decision to not account for inflation in their projections is commonplace in long-term financial outlooks.
"The projection issue ... isn't unique to Trump Accounts. It's how nearly every long-horizon financial projection in the industry is presented," says Matt Chancey, founder of Tax Alpha Companies. "The result is projections that look impressive in a marketing brochure but overstate what the money will actually buy when the family needs it."
Proponents say discussions about projected returns are secondary if families don't have money to invest in the first place.
"This historic program democratizes wealth creation for working families & gives our kids a real stake in America's future," said Rep. Young Kim, who has introduced legislation to make the $1,000 federal seed deposit permanent.
But critics say a $1,000 deposit alone is unlikely to move the needle for families unable to make additional contributions.
Darrick Hamilton, an economist who developed the "baby bonds" concept often credited as inspiring Trump accounts, says the policy's design favors families that already have money to save.
While every eligible child receives a $1,000 government deposit, Hamilton says the largest gains depend on families being able to make regular contributions over time. Those with higher incomes are more likely to maximize the accounts' tax advantages and benefit from years of compound growth.
"The rich get richer based on compounding interest. So if we really want to combat that, we want to democratize access to capital so that everybody can get into the asset that's going to passively appreciate," Hamilton says. "Doubling down on the mechanisms by which compound interest occurs is only fueling the problem"
Write to Elijah Nicholson-Messmer at elijah.nicholson-messmer@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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