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