President Donald Trump‘s new Trump Accounts could help children build seven-figure retirement savings, but financial planners say the program’s eye-catching millionaire projections depend on decades of strong stock market returns that may not materialize, according to a Fortune report published Sunday.
Fortune interviewed four financial advisers who agreed the accounts can become powerful long-term wealth-building tools, but cautioned that the projections displayed in the Trump Accounts app assume annual returns of more than 10%, a figure they consider optimistic. Morningstar, by comparison, recently projected U.S. stocks could return about 6.3% annually over the next decade.
Trump Accounts, created under President Trump’s One Big Beautiful Bill Act, officially launched earlier this month. Eligible U.S. children born between Jan. 1, 2025, and Dec. 31, 2028, receive a one-time $1,000 contribution from the U.S. Treasury, while families, employers and others can collectively contribute up to $5,000 annually.
Wealth-Building Potential
Registered investment adviser Pam Krueger, founder of Wealthramp, modeled the accounts using a 7% annual return instead of the app’s assumptions. She estimated that a family contributing the maximum amount each year could accumulate roughly $185,000 by the time the child turns 18, with the account growing to more than $1 million by age 45 if left invested.
“Time in the market is doing the heavy lifting,” Krueger told Fortune, adding that more than 90% of the account’s eventual value comes from decades of compound growth rather than contributions.
Mitch Hamer, founder of Intersecting Wealth, reached similar conclusions, estimating a max-funded account could also exceed $1 million by age 45 using a 7% return assumption.
Certified financial planner Matthew Chancey said family contributions account for only a small portion of the projected balance over time, with most of the wealth created through compounding. Meanwhile, Adam Vega, managing partner at Avance Private Wealth Management, said converting the account into a Roth IRA early in adulthood could allow beneficiaries to build millions of dollars in tax-free retirement savings over several decades.
Returns Are Not Guaranteed
The advisers also warned that the projections shown in the app should not be viewed as guarantees.
Krueger said even a one- or two-percentage-point difference in annual returns could reduce the final balance by hundreds of thousands of dollars. She also cautioned that many families confuse tax-deferred investing with tax-free investing, noting that withdrawals are generally taxed as ordinary income.
The experts further highlighted another risk: beneficiaries gain full control of the accounts at age 18. Chancey said the biggest challenge is ensuring young adults leave the money invested long enough for compounding to work, while Hamer and Vega stressed that financial education will be just as important as investment performance.
Trump Accounts, created under President Trump’s One Big Beautiful Bill Act, officially launched earlier this month. Eligible U.S. children born between Jan. 1, 2025, and Dec. 31, 2028, receive a one-time $1,000 contribution from the U.S. Treasury, while families, employers and others can collectively contribute up to $5,000 annually.
Financial planners have previously pointed to additional long-term benefits of the program beyond the government’s seed contribution. Experts have said Trump Accounts could eventually provide a pathway to Roth IRA conversions, potentially allowing beneficiaries to continue building tax-free retirement savings under certain conditions.
Separately, experts have also noted that official guidance from the U.S. Department of Education on how the accounts will be treated for federal financial aid purposes remains pending.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo Courtesy: Inside Creative House on Shutterstock.com
Recent Comments