Retirement Social Security

Trump Accounts Are Getting Attention - But Experts Say They Won't Fix Social Security's Real Problem

Cruz frames Trump Accounts as a path to Social Security personal accounts.

By David Maina, CPA , Edited by Laura Hohenstein

Updated June 2, 2026

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When Trump Accounts were first rolled out, they were framed as a way to give children a head start on savings. But the conversation took a turn recently when Sen. Ted Cruz described them as a possible model for future 'Social Security personal accounts."

For anyone close to retirement, that is a much bigger conversation. Social Security is funded by the payroll taxes workers pay today, so redirecting part of that money into private accounts would raise immediate questions about how current senior benefits would continue to be paid.

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What Trump Accounts actually are

Trump Accounts were created under the Working Families Tax Cuts Act, signed into law on July 4, 2025. They're tax-advantaged savings accounts for children born between 2025 and 2028.

Each eligible child receives a $1,000 deposit from the federal government, and families can add up to $5,000 per year on top of that. The money is invested in broad U.S. stock index funds and cannot be accessed until the child turns 18.

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What Cruz said and why it drew attention

At a May 2026 conference, Cruz described Trump Accounts as "Social Security personal accounts" and suggested that workers might one day want a similar option for their own payroll taxes. The idea was that once families watch their children's accounts grow in the stock market, support would build for letting adults do the same with a portion of what they pay into Social Security.

Cruz hasn't introduced legislation to make that happen. The comment was still enough to turn heads, though, because proposals to redirect payroll taxes into personal investment accounts have come up before and have always sparked a serious debate about what it would mean for the program.

Why personal accounts have failed before

President Bush proposed something similar in 2005, allowing younger workers to divert part of their Social Security taxes into personal investment accounts. It failed quickly, largely because seniors and near-retirees saw it as a threat to the guaranteed benefit they had been counting on.

The core problem, which economists call the "transition cost," is what made it so difficult. Social Security pays current retirees with the payroll taxes that today's workers and employers are contributing right now.

If some of that money gets rerouted into personal accounts for younger workers, less is available to cover checks for the people already retired. Filling that gap would mean raising taxes, borrowing, or trimming benefits, and no proposal so far has offered a clean way around it.

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What diverting payroll taxes would mean for the trust fund

Social Security is funded by a 12.4% payroll tax on wages, split between workers and employers. In 2024, that brought in about $1,105 billion. Benefits cost around $1,327 billion, with the trust fund covering the difference. Those reserves are already projected to run out around 2033, after which incoming taxes would cover roughly 77% of scheduled benefits.

Redirecting even a small share of that tax into personal accounts would reduce the revenue available to pay current benefits. The trust fund is already running a deficit, so any diversion would widen the gap unless Congress replaced the lost money.

The larger the share redirected, the faster the trust fund burns through its remaining reserves, and the sooner the depletion date arrives.

What personal accounts would actually deliver

Younger workers would have decades for a personal account to grow, which is the appeal. But Social Security pays a guaranteed monthly benefit for life, adjusted for inflation every year. A personal account rises and falls with the stock market, and the timing of those swings can make a big difference in what you actually retire on.

Research published in the Journal of Banking and Finance found that most workers would end up receiving less under a personal-account system than they would from Social Security's guaranteed benefit. The main reason is that a market downturn in the years just before or after retirement can permanently shrink your income in a way that a guaranteed benefit never would.

Where things stand now

For now, payroll taxes are going entirely into the Social Security trust fund, and no legislation exists to redirect any of that money into personal accounts.

Cruz's comments suggest the idea is still alive politically. If children's accounts grow and become popular over the next several years, the argument for offering something similar to adults could pick up support. But turning that into law would mean solving the same transition-cost problem that has blocked every previous attempt.

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Bottom line

Trump Accounts are a children's savings program, and as they exist today, they have no connection to Social Security or your benefits. Any real risk to your check would only come if Congress eventually passes legislation redirecting payroll taxes into personal investment accounts, and that hasn't happened.

Still, a sitting senator is already talking about children's accounts as a possible step in that direction. If your retirement plan depends on Social Security, that is the part worth watching closely, as any move toward private accounts would trade a guaranteed check for a market-based one.

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