The Trump administration has promoted the accounts as a way for American families of all income levels to build wealth for their children. As you scroll down the account website, TrumpAccounts.gov, you’ll see dollars stacking up at the top of the page and projections of how much the account will be worth when the holder turns 18, 27, and 55. At age 55, a child’s first $1,000 investment can grow to $243,000, without other contributions, according to the site.
Those numbers may be too bullish, according to calculations conducted exclusively for CNBC by investment research firm Morningstar. When asked to perform similar forecasts while modeling factors such as return volatility, household income, and investor behavior, Morningstar gave a more modest picture of account holders’ financial health over the same interval. For example, under this model, a 55-year-old who receives a single $1,000 seed investment would expect his account to grow by $38,000 on average.
Still, the data shows that Trump’s account could lead to strong wealth creation over the long term if investors are prepared for the long term.
“Intuitively, long-term wealth accumulation is primarily driven by ongoing contributions from family members and employers,” said Spencer Look, associate director of retirement research at Morningstar.
Also, perhaps intuitively, those with more means are even more likely to benefit from the arrangement. Morningstar found that the results were significantly better among high-income Americans, people who are more likely to donate large amounts and less likely to withdraw money from their accounts for other expenses.
This “leakage,” which researchers call accountholder withdrawal, is the main reason why accountholders achieve worse outcomes than TrumpAccounts.gov predicts in many of the scenarios simulated by Morningstar. In some cases, that breach could leave a 27-year-old and a 55-year-old with a $0 balance.
Modeling real-world scenarios
To model how accounts work in reality, Morningstar has made several important assumptions. First, the model only includes contributions to accounts up to age 18 and operates on the assumption that once account holders reach the age of majority, they will prioritize more tax-advantaged vehicles, such as 401(k)s and individual retirement accounts.
Simulated returns are based on Morningstar’s capital market assumptions for large company stocks, less a 0.10% annual investment management fee. Across the various outcomes, annualized returns range from 2.17% (10th percentile result for an 18-year-old account holder) to 10.29% (90th percentile result for a 55-year-old account holder). The arithmetic mean return across studies is 9.17%.
Morningstar used Vanguard retirement account data to map the likelihood that Trump account holders, who gained control of their accounts at age 18, would withdraw funds from their accounts. The model simulates liquidation at age 18, when account holders can use the money for things like education expenses, and at age 30, when they can put the cash toward various “adult” goals, such as buying a home.
The results reveal two major rules of the road.
Your contribution makes a big difference
Morningstar’s numbers show that while seed money can grow over time, the accounts with meaningful wealth accumulation are those with consistent contributions from family or employer.
Morningstar found that the average account holder who received only a $1,000 seed contribution could expect to have an account balance of $3,324 by age 18. Add in an annual contribution of $250 and the average amount jumps to $15,154. At half the annual maximum of $2,500 per year, your account would grow to $121,632.
leakage problem
The Trump administration has rightly pointed out that Trump Accounts, if consistently donated, could help Americans build wealth over the long term. But for it to work, the funds must stay in the account and grow with compound interest.
And in the real world, Look says, workers, especially low- and middle-income earners, are more likely to use that money for a variety of financial goals.
“A lot of people, especially the people you want to benefit the most, and the people who would benefit the most in relative terms, are more likely to need to take their money out, and there’s probably a good reason for that.”
The Trump administration said the account would give a generation of Americans a head start financially, regardless of the controversy over the breach. “There is no doubt that these are powerful tools to help ordinary Americans save for retirement,” White House Press Secretary Khush Desai told CNBC.
Nevertheless, the leak could have a major impact on whether the Trump account becomes a vehicle for long-term wealth. A 55-year-old with annual contributions of $1,000 can expect an average balance of nearly $850,000, according to Morningstar research. However, in the bottom 25% of predicted scenarios at that contribution level, your account will have a balance of $0. It’s not because the market crashed in these simulations.
Instead, in Morningstar’s simulations, people with lower incomes and lower earnings are far more likely to use cash to buy a car, pay for education, or liquidate their accounts to simply make ends meet.
Maximize your account and manage expectations
The results have two clear lessons for parents who want to increase their children’s long-term wealth. One is that increasing your contributions can make a big difference in your child’s future wealth.
Some households will be more likely to donate than others. According to the U.S. Census Bureau, the median household income in the U.S. in 2024 was about $84,000. Annual contributions of up to $5,000 to Mr. Trump’s account account for about 6% of that amount.
But even a $1,000 annual donation can make a meaningful impact. By the time a child reaches 18 and the account is theirs to manage, Morningstar predicts that they could reach more than $50,000 at that level.
Doug Boneperth, a certified financial planner and founder of Born Fied Wealth, said the amount “feels huge” to an 18-year-old. So communicating with your child about the long-term potential of the account will be essential, he said.
That’s easier said than done, he added. For an 18-year-old, $50,000 means a new car or two years of rent on a nice apartment. But Bonepers explains that using forecasts like Morningstar’s can protect against leaks and make the case for long-term holdings.
“‘Do you have $50,000 in your bank account? If you let it, there’s a realistic path to more than $500,000 by age 55,'” Vonepers suggests as a possible script. “If you spend it, instead of spending $50,000, you’re spending $500,000.”
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