US Treasury Secretary Scott Bessent said the child savings accounts known as Trump Accounts could work alongside Social Security and help improve retirement security for younger Americans.
His argument is that the accounts could give future retirees another source of money instead of relying only on Social Security. Bessent pointed to the different ages at which people can start claiming Social Security — 62, 65 or 70. Eligible children can receive a $1,000 initial contribution, or seed money. Children born during President Donald Trump’s second term are eligible for the $1,000 seed contribution. However, the $1,000 payment will not be made automatically into newly auto-enrolled accounts.
Bessent said the accounts could give children a separate pool of money that may grow for decades and later be used for retirement. He said that if people keep their Trump Accounts invested until retirement age, they could have a substantial nest egg in addition to their Social Security benefits. Bessent said the accounts could continue growing and help meet retirement needs later in life, according to Yahoo Finance. A parent or guardian must first claim the account, according to Yahoo Finance.
He made the comments at an event in Harrisburg, Pennsylvania, on Monday, while highlighting the Trump Accounts, according to Yahoo Finance.
Employers can also contribute money to the accounts and allow workers to help fund them. This means the accounts can grow beyond the initial government contribution if families, employers or other eligible contributors continue adding money. Parents can contribute as much as $5,000 a year to a Trump Account. Bessent said around 350,000 foster children across the US could be eligible for Trump Accounts. Gwynne Shotwell, president of SpaceX, pledged more than 2 million shares this summer for children aged 11 to 17 living in lower-income areas.
He said the federal government would work at the state, county or municipal level to make sure eligible foster children are included. The contribution is an example of how wealthy individuals or organisations could use the new rules to provide investments to groups of children, according to Yahoo Finance.
First Lady Melania Trump had pushed for this effort earlier in the summer.
