Could ‘Trump Savings Account’ Help Your Kids Buy a Home? Maybe But It Might Widen Wealth Gap

Life isn’t getting cheaper.

Since the 1970s, college tuition has more than doubled and home prices have soared by over 1,000%, according to the Journal of Consumer Research. Gen Z now steps into adulthood with 72% less purchasing power than baby boomers had at the same age. If the trend holds, Gen Alpha—the youngest and projected to be the largest generation yet—could face an even steeper uphill climb.

Governments around the world are starting to pay attention. In Germany, officials have proposed giving children as young as six a retirement savings account. In the U.S., former President Donald Trump has unveiled a plan aimed at helping American kids build long-term wealth, starting at birth.

It’s called the Trump Savings Account. And depending on who you ask, it’s either a smart way to jump-start financial security or a shiny new tool that could quietly widen the wealth gap.

What Is a Trump Savings Account?

As part of a proposed House budget provision called the Invest America Act, the Trump Savings Account would be a tax-advantaged investment account created for every child born between January 1, 2025, and December 31, 2028.

Each eligible baby would receive a $1,000 government-funded seed investment. After that, anyone—parents, relatives, friends, even employers—could contribute up to $5,000 per year into the account. The funds would be invested in a low-cost S&P 500 index fund and grow tax-deferred. Once the child turns 18, they could withdraw the money for any reason, with gains taxed at the capital gains rate.

Trump called it “a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation.” He added that recipients would be “getting a big jump on life, especially if we get a little bit lucky with some of the numbers.”

Behind the math is Brad Gerstner, CEO of Altimeter Capital and one of the plan’s key architects. If families chip in just $750 a year, he claims the account could grow to:

• $50,000 by age 18
• $175,000 by age 30
• $1 million by age 50

Early investing plus compounding interest over decades can add up.

Trump also emphasized the broader effects of financial stability in childhood. “Children with savings accounts,” he said, “are more likely to graduate high school and college, buy a home, start a business, and are less likely to be incarcerated.” In his view, the Trump Account could help set up “millions of newborn babies” for lifelong success.

How Is This Different From a 529 Plan?

If this idea feels a bit familiar, that’s because it echoes the 529 plan, a tax-advantaged account that many parents already use to save for their kids’ education. But there are key differences.

529 plans are limited to education expenses like college tuition, K–12 private school fees, or apprenticeship programs. Withdrawals used for anything else typically trigger taxes and penalties.

By contrast, the Trump Savings Account is far more flexible. Once the child turns 18, they can use the money for anything from buying a home to starting a business, or even just building a rainy day fund. Plus, the accounts would be privately managed, not run by state governments like 529s.

With rising education costs and growing home prices, many families may find that flexibility appealing.

A Path to Homeownership?

For many young Americans, the hardest part of buying a home isn’t the mortgage, it’s scraping together the down payment.

“Down payment savings, or the lack thereof, can be a major difference maker for many households,” says Danielle Hale, chief economist at Realtor.com. “Having funds can mean getting into your own home years sooner.”

The Trump Account could be a game-changer for that. In 2024, the median down payment for first-time buyers was $37,521, or about 9% of a $416,900 home, according to the National Association of Realtors. Many buyers lean on help from family, friends, or even inheritances to get there.

If a Trump Account grows to around $50,000 by the time a child turns 18, as Gerstner projects, it could more than cover that first down payment. But there’s a catch: these figures hinge on steady annual contributions, the kind only some families can afford.

Critics Say It Could Deepen Inequality

The elephant in the room? Who actually gets to benefit.

“The savings accumulation will be even more powerful if individuals continue to contribute beyond the initial $1,000 seed funding from the federal government,” says Hale. But many families, especially lower- and middle-income ones, may not be able to keep up those annual contributions.

A 2023 report by the Urban Institute showed that the bottom 80% of U.S. households hold just half as much liquid wealth as the top 20%. That means fewer resources to put into long-term accounts, and more pressure to dip into savings when emergencies strike. And while the Trump Account allows withdrawals after 18, tapping it early triggers a 10% penalty, which could deter low-income families from using it when they need it most.

In that light, some critics argue the Trump Account may end up amplifying existing wealth gaps, not closing them.

And if only some households can afford to max out contributions year after year, the compounding advantage could stack the deck even more in favor of children from already-wealthy families, those who arguably need the least help building wealth.

Still, $1,000 Is Better Than Nothing

Even if no one adds another dollar, the $1,000 seed alone could grow to about $5,000 by age 18 (depending on market performance). That’s not life-changing, but it’s not nothing either.

Paired with first-time homebuyer programs, down payment assistance, or even just the psychological effect of having a dedicated savings account, it could make a difference. It’s a small foothold in an economic landscape where the cost of simply getting started, whether it’s college, a house, or a business, keeps rising.

The real test will be whether the plan gains traction in Congress, and whether it’s designed with equity in mind. Will it include matching funds for low-income families? Could early withdrawals be made penalty-free in case of hardship? Will the benefits extend past 2028?

For now, the Trump Savings Account is just a proposal. But it taps into a broader truth: the American Dream has gotten more expensive, and families are hungry for new ways to keep up.

Whether this plan helps level the playing field, or tilts it even more, will come down to how it’s built, and who it’s built for.