Baby Bankers: In Defense of Proposed Alternative Youth Social Welfare Savings Accounts
On July fourth, 2025, President Trump signed the One Big Beautiful Act and, with it, created a new generation of investors: baby bankers. “Trump Accounts” are the first federal child savings accounts in the US—a policy President Trump argues will help American children build long-term wealth through early investment. Under this policy, the federal government will seed eligible children’s accounts with $1,000, which is invested in broad US stock indexes and allowed to grow until adulthood. At a time when the US faces unprecedented economic challenges, alternative government investment accounts like these are worth exploring. These accounts decrease risk by spreading the management of social welfare funds, increasing individuals’ autonomy over money invested for their future, and providing a financial buffer for Americans growing up in an increasingly challenging economic environment.
The US is currently facing a social welfare crisis. Its reliance on Social Security as its primary federal retirement safety net has created a fiscal bottleneck. Social Security depends on current workers to support retirees, under the assumption that future generations will do the same. As the birth rate falls, meaning fewer future workers to pay into the program, and the government accrues trillions of dollars in debt, this system is increasingly strained.
These stressors expose a major problem: Social Security relies on increasingly volatile funds. Trump Accounts instead diversify how the government invests in its citizens. Instead of relying solely on future tax revenues, the government can invest in individually owned assets decades before people need benefits. During the accounts’ “growth period,” investments must track a broad index of primarily US equities, avoid leverage, and carry fees no higher than 0.1%. Markets can fail, meaning Trump Accounts replace some government and demographic risk with market risk. But that is the point of diversification: investments don’t need to be riskless; they just need to avoid being vulnerable to the same risks.
Individual ownership also gives citizens more autonomy over money invested for their future. Critics have questioned allowing young adults to control these funds, assuming newly minted adults will not be fiscally responsible. But Americans do not suddenly acquire the ability to make bad financial decisions because the government gives them an investment account. At 18, you can already take out loans for a degree you do not want, buy a motorcycle you cannot afford, or get your future ex’s name tattooed on you. Fiscal irresponsibility stems from a lack of experience and education, not the existence of a new social safety net.
In fact, ownership may increase financial literacy by forcing young Americans to interact with investing earlier. Their Trump Account could be their first introduction to an index fund, compound returns, or simply the idea that money invested today can look dramatically different forty years from now. Learning these lessons early becomes especially important when this generation may have a harder time building wealth than generations before it.
While roughly 90% of Americans born in 1940 eventually earned more than their parents, that figure fell to around half for Americans born in the 1980s. Americans born today will also inherit a growing national debt, an aging population, and increasingly expensive housing. A $1,000 account does not fix these problems, and Trump Accounts are not perfect. Equal starting contributions will not create equal outcomes when wealthier families can contribute more, and market investments inevitably carry risk. But imperfect policy can be shaped over time. Starting now gives us more time to experiment and create better policy for the future. As children now will face almost insurmountable economic challenges in their adulthood, the current most valuable resource these children have is one the government cannot manufacture later: time. A dollar invested at one has decades longer to compound than a dollar given at 65.
The baby bankers receiving $1,000 today will not retire for more than half a century. We have no idea what Social Security, financial markets, or the American economy will look like when they do. That is precisely why giving them more than one way to prepare may be worth the investment.
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Towfiqu Barbhuiya, Pexels License, via Pexels
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