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Could Trump’s $1K Retirement Accounts for Babies Replace Social Security? What the Experts Say

By U.S. News & World Report

During the Milken Global conference in Beverly Hills on Monday, Republican Senator Ted Cruz said President Donald Trump’s $1,000 “Trump Accounts,” referred to as the “401(k)s for babies,” could lead to a Social Security privatization effort that failed during the Bush administration.

“Here is the little secret,” Cruz said at the conference. “Trump Accounts are Social Security personal accounts.”

He added, “How did we get it done this time? Because we gave the money to babies, and so the old people didn’t get pissed. But you know what? Babies grow up. That little girl born this year, she is going to be 70. And the math is if you contribute regularly to it, by the time she is 18, she will have $170,000 in that account.”

Some experts are skeptical that these account plans have the wherewithal to substantiate such a monumental shift. Here’s what retirement savers should know.

[READ: What Is the Social Security COLA for 2027?]

‘The Little Secret’: Trump Accounts Are Private Social Security Funds

The proposal that newborns in the United States receive a $1,000 tax-deferred investment account for those born through 2028 was included as a provision in Trump’s tax legislation and signed into law as part of his One Big Beautiful Bill. The accounts allow yearly contributions of up to $5,000 and can be accessed once the account owner turns 18. It’s set to launch on July 4.

Some experts argue that Trump Accounts are private Social Security funds dressed as something else. Members of Trump’s administration have previously said it themselves.

Treasury Secretary Scott Bessent in July 2025 said that Trump Accounts could be “a backdoor for privatizing Social Security.” By privatizing Social Security, workers would be able to invest a portion of their payroll taxes into their personal accounts. While this would allow for greater investment flexibility and the added potential of more gains, it could risk causing market instability, which could jeopardize retirement income.

[READ: A $100K Social Security Cap Proposal: What to Know and How to Protect Your Retirement]

Will Trump Accounts Replace Social Security? Experts Weigh In

Retirement experts and everyday Americans have worried about the state of Social Security, as it faces depletion by 2032 and 24% benefit cuts.

With Social Security less than seven years from insolvency, changes may be required to salvage the future of retirement in the U.S. However, experts say Trump Accounts aren’t the only solution to this complex issue.

“While policymakers may debate new savings options or investment accounts, Americans should understand that these are fundamentally different from traditional Social Security benefits and carry different levels of risk, ownership and guarantees,” wrote Shannon Benton, executive director of The Senior Citizens League, in an email.

Some experts don’t see Social Security vanishing entirely. “Do I think Social Security disappears? No,” wrote Jeff Judge, a certified financial planner with Chesapeake Financial Planners, in an email. “It’s a political third rail that’s been declared dead four times in my career and survived every one of them.

He adds, “A full elimination is not a real near-term risk. What I do think is likely is a gradual shift in the mix: higher retirement ages, reduced (cost-of-living) adjustments and eventually some form of voluntary personal account carve-out for younger workers.”

Other experts agree. “Social Security is a throwback to a different era, but general benefits will be maintained,” says David Demming, a certified financial planner with Demming Financial Services. “There have to be moderate adjustments to keep stable for (the) bulk of U.S. retirees.”

To accommodate an uncertain retirement future, many experts recommend that savers make retirement estimates that account for a future with lower or nonexistent Social Security benefits. Says Judge, “Don’t plan around a benefit number that Congress has the authority to change.”

More from U.S. News

2026 Guide: How to Maximize Social Security With Spousal Benefits

2026 Guide: What Happens If You Work While Receiving Social Security?

How Much Will You Get From Social Security?

Could Trump’s $1K Retirement Accounts for Babies Replace Social Security? What the Experts Say originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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