Trump accounts may be privatized personal Social Security accounts

A new type of investment account launching this summer is marketed as a wealth-building tool for American children, complete with a $1,000 government deposit and the promise of six-figure growth by adulthood.

The pitch sounds simple enough, but a key Republican senator has just revealed that these accounts may serve a much larger purpose, affecting the retirement security of every working American.

Senator Ted Cruz (R-Texas), who authored the Trump Accounts provision within the One Big Beautiful Bill Act, told the audience at the Milken Institute Global Conference that the accounts are designed to build public support for eventually redirecting Social Security payroll taxes into personal investment accounts, The Hill reported.

If you pay into Social Security or depend on it for retirement income, the implications of that statement could reshape the program that roughly 71 million Americans rely on, the Social Security Administration noted.

Sen. Ted Cruz calls Trump Accounts "Social Security personal accounts"

Speaking at a May 4 panel discussion at the Milken Institute Global Conference, Ted Cruz described Trump Accounts as the realization of a 50-year conservative goal to create personal Social Security accounts, CNBC reported.

Here's the dirty little secret: Trump Accounts are Social Security personal accounts.

"We're going to be able to go to parents and say, 'Hey, you know that Trump account your kid has? Wouldn't you like to be able to keep a portion of your tax payments that you're paying already, and instead of sending it to Uncle Sam, wouldn't you like to have a Trump account just like your kid does?'" Cruz added.

Cruz, the chief architect of the Trump Accounts provision within the One Big Beautiful Bill Act, according to Newsweek, projected that a child born in 2026 with regular contributions could accumulate $170,000 by age 18 and $700,000 by age 35.

He predicted that within five years, the growth in those accounts would create a constituency demanding the same treatment for their own payroll taxes, The Hill reported.

The senator drew a direct comparison to former President George W. Bush's failed 2005 effort to let younger workers shift a portion of their payroll taxes into personal accounts. Cruz argued that the Bush plan collapsed because it threatened benefits for current retirees, while Trump Accounts avoid that backlash by targeting newborns and young children instead.

Social Security's trust fund faces 2033 depletion deadline that could cut benefits

The privatization conversation gains urgency because Social Security's Old-Age and Survivors Insurance trust fund is projected to run out of reserves in 2033, at which point benefits would automatically fall by 23%, the Social Security Board of Trustees reported in its most recent annual assessment.

The program faces a $230 billion cash shortfall in 2026 alone, according to Brookings, with a cumulative shortfall now estimated at more than $26 trillion over the next 75 years, the Bipartisan Policy Center said in a March 2026 letter submitted to the Senate Budget Committee.

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Workers and employers each pay 6.2% of wages toward Social Security, up to a taxable maximum of $184,500 in 2026, according to the Social Security Administration. Diverting even a portion of those payroll contributions into private accounts would reduce the revenue flowing into a system whose total costs have exceeded its total income, including interest from the trust fund, every year since 2021.

The demographic math compounds the challenge for any privatization proposal, with fewer than three workers now paying into the system for every beneficiary drawing from it, down from more than five in 1960, according to the Peter G. Peterson Foundation.

Linda Stone, a senior pension fellow with the American Academy of Actuaries, told AARP that the declining worker-to-beneficiary ratio is a structural issue that private accounts alone cannot resolve.

Image source: Vitaly Gariev on Unsplash

Labor economist Teresa Ghilarducci pushes back on the privatization framing

Not everyone involved in designing the new retirement accounts shares Cruz's interpretation of their purpose. Teresa Ghilarducci, a labor economist at the New School for Social Research who co-wrote research with National Economic Council Director Kevin Hassett on the need for universal retirement savings, told CNBC that privatization was never part of the plan.

"From everybody that I've talked to for the past four years about creating these universal accounts, no one has breathed privatization," Ghilarducci said. She argued that both the Trump Accounts and the Trump IRA executive order address real gaps in retirement savings, but that Social Security reform requires separate legislative action.

The White House has officially vowed to "preserve and protect" Social Security and has not publicly endorsed privatization as an administration goal, CNBC noted. That positioning puts the administration at odds with Cruz's public framing, creating a tension that financial planners and retirement policy experts are watching closely.

"Having wealth is going to give people hope that they can retire," Ghilarducci told CNBC, suggesting the accounts serve a supplementary function rather than a replacement for Social Security's guaranteed benefits.

Privatization carries risks that could undermine Social Security safety net

The core tension in any privatization proposal is that Social Security operates as a pay-as-you-go system, meaning today's workers fund today's retirees.

Market risk adds another layer of concern for workers who would depend on these accounts in retirement rather than a guaranteed monthly benefit.

The S&P 500 has produced strong historical returns over decades, but retirees do not experience average returns in a straight line, and a downturn close to withdrawal age can sharply reduce a portfolio's value, CNBC noted in its analysis of the proposal.

Whether Cruz's vision gains traction in Congress or remains a solo declaration will depend on how quickly the accounts accumulate visible wealth and on whether lawmakers face enough political pressure from a looming 2033 deadline to act.

For the tens of millions of Americans depending on Social Security, the answer matters more than the label attached to the accounts themselves.

Related: Trump Accounts may soon welcome a controversial new asset

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This story was originally published May 24, 2026 at 10:47 AM.