How a ‘Trump Account’ Could Grow to $22 Million by Retirement
“Trump Accounts,” the new tax-deferred investment accounts made a reality by the “One Big Beautiful Bill,” could grow to be very large over time if properly “fed” by its custodians, a new estimate finds.
Serae Wealth, a Houston-based boutique wealth management firm providing bespoke financial guidance, estimates that the new $1,000 “Trump Accounts” for newborns could grow from nearly half a million dollars to an astonishing $22 million by the time the child retires.
How did they get there? “If that $1,000 is left untouched until age 65 and invested in a broad U.S. stock index such as the S&P 500, the account could grow to roughly $490,000 based on historical growth averages, even without any additional contributions,” a Sept. 9 press release from Serae Wealth states. “If a family were to contribute the full allowable $5,000 each year from birth through age 18, and the money grew at the historical average return of the S&P 500, that account could grow to $22.1 million by age 65.”
The press release notes that “because past performance is not always indicative of future results, these figures are solely hypothetical and for illustrative purposes only.”
A quick run through AI reveals the numbers in the release “are mathematically possible but wildly optimistic given likely future returns, contribution behavior, and policy uncertainty.”
It is indeed a “best-case scenario,” showcasing the power of compounding. But the provocative release is likely intended to spark conversation about the new Trump Accounts, which President Donald Trump called “one of the most exciting parts” of the massive, signature OBBB legislation.
Every child born between Jan. 1, 2025, and Dec. 31, 2028, and who is a U.S. citizen with a valid Social Security number and at least one parent with an SSN, automatically qualifies for the program and a $1,000 seed deposit. Trump Accounts cannot technically be opened before July 4, 2026, but infants born in 2025 will still get the seed money—it’s just that the actual accounts won’t be operational until mid-2026, when the system to open and manage Trump Accounts comes online.
“For families who receive a Trump Account, the potential for long-term benefit is significant,” said Scott Hefty, senior wealth manager and founding partner at Serae Wealth. “The scale of that benefit will vary, but the baseline is an improvement compared to having no such account at all. If Congress extends the program beyond 2028, the long-term potential impact would grow even further.”
Currently, Trump Accounts are structured to function similarly to a traditional retirement account. It offers tax-advantaged growth and penalty-free withdrawals after age 59 and a half. However, several exceptions allow for earlier use, including education expenses, buying a first home or starting a business. In addition to the $1,000 federal seed, families can contribute up to $5,000 per year per child. Up to $2,500 of that total can come from a parent’s employer, which the press release adds could be a powerful new form of employer benefit.
“While some individuals may prefer more flexibility, the rules are in place because the government is offering a benefit in exchange for encouraging certain outcomes. Most tax-advantaged accounts come with rules for that reason,” said Joe Anderson, senior wealth manager and founding partner at Serae Wealth. “The structure may not please everyone, but it is consistent with how long-term financial tools are typically designed.”
Let’s take a closer look at the math. Growing from the $1,000 seed at birth to $490,000 assumes ~10-11% annualized returns for 65 years (close to the S&P 500’s long-term average). While theoretically possible, compounding over such a long period with no withdrawals is optimistic—especially since future returns are widely expected to be lower than the historical average.
For a Trump Account to grow to the $22.1 million mentioned in the press release, it would require 19 contributions of the full allowable $5,000 each year (ages 0-18). Using a ~10% annualized growth rate, the math does check out on paper—but it’s highly sensitive to the assumed return. Even a modest reduction from 10% to 7%—which would be closer to many experts’ forward-looking estimates—would cut the outcome dramatically, closer to ~$5-7 million rather than $22 million. But still a substantial sum.
“Ultimately, this account reflects a broader shift in how Americans build wealth across generations. We are moving toward a model where families, employers and the federal government each play a part. That shift will not solve every issue, but it is a conversation worth having,” Hefty said. “A Trump Account may not be a perfect fit for every family or every goal, but it represents an important new financial tool.”
Reality check: How Trump Accounts could grow
Based on different annual return assumptions, here’s how AI calculates a $1,000 newborn “Trump Account” seed—with and without additional $5,000 annual contributions through age 18—might grow by age 65.
- At 6% returns
• $1,000 seed only → $44,000
• $1,000 + $5k/yr (0–18) → $2.7 million - At 7% returns
• $1,000 seed only → $81,000
• $1,000 + $5k/yr (0–18) → $4.6 million - At 10% returns (historical S&P 500 average)
• $1,000 seed only → $490,000
• $1,000 + $5k/yr (0–18) → $23 million
Note: Figures are hypothetical and assume consistent returns, no fees, no inflation, and no withdrawals. Actual results will vary, and future returns may be lower than historical averages.
SEE ALSO:
• Trump, Business Leaders and Lawmakers Tout ‘Trump Accounts’ in Monday Roundtable
• ‘Trump Accounts’ Christened as New Name for ‘MAGA Accounts’ in GOP Tax Bill
• ‘401(k) for Kids’ Included in New GOP Tax Proposal
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
