With home prices up over 1,000% since the 1970s, it’s no surprise that Gen Z entered adulthood with 72% less purchasing power than Baby Boomers had at the same age. And if current trends continue, Gen Alpha, today’s newborns and toddlers, could fall even further behind.
A new proposal in the House budget aims to change that, starting at birth.
A New Kind of Nest Egg
Under a provision in the One Big Beautiful Bill, children born between January 1, 2025, and December 31, 2028 would receive a $1,000 government-funded seed investment into what’s being called a Trump Savings Account—a tax-deferred account pegged to a stock market index like the S&P 500.
President Trump described the program as “a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation.”
Parents, family members, employers, churches, and private foundations could contribute up to $5,000 per year to the account, which would grow over time and be accessible to the child after age 18.
Unlike 529 plans (investment accounts that help families save for education expenses with tax advantages), these Trump accounts could be used for a variety of adult milestones, including:
- College or vocational training
- Starting a business
- Buying a first home
The proposal aims to give young adults a financial head start, especially when it comes to achieving the increasingly elusive goal of homeownership.
As Dell CEO Michael Dell pointed out:
“With these accounts, children will be much more likely to graduate from college, to start a business, to buy a home, and achieve lifelong financial stability.”
House Speaker Mike Johnson added:
“If you have a 401(k), you understand the power of investing early for the future. Trump Accounts take that same principle and they apply it from the very beginning of Americans’ lives …
“It’s a bold, transformative policy that gives every eligible American child a financial head start from day one … Trump Accounts are all about setting up the next generation for success.”
Could It Help with a First Home?
According to the National Association of REALTORS®, the median down payment for first-time buyers in 2024 was 9%, or $37,521 on a $416,900 home. While many buyers get help from family or inheritance, a dedicated savings account starting at birth could change the game.
Realtor.com® Chief Economist Danielle Hale explained:
“Down payment savings, or the lack thereof, can be a major difference maker for many households as they contemplate buying their first home.”
If families consistently contributed $750 per year, Brad Gerstner, CEO of Altimeter Capital and co-architect of the legislation, estimates the account could grow to:
- $50,000 by age 18
- $175,000 by age 30
- $1 million by age 50
That’s the upside. But as with any long-term investment account, the power of compounding only works if the money stays put. And the potential for savings large enough to help with a home purchase depends on additional contributions being made along the way.
A Good Start, But Not a Silver Bullet
Even without extra contributions, the $1,000 seed investment alone could grow to around $5,000 by the time the child turns 18. That’s not enough for a down payment, but paired with down payment assistance or other programs, it could make a meaningful difference.
Still, there are important caveats.
- Withdrawals before age 18 aren’t clearly addressed, raising questions about whether parents or guardians could access (or misuse) the funds early.
- Households without extra money to contribute each year, especially those in the bottom 80% by wealth, would not see the same long-term benefit.
- Emergency withdrawals could be penalized, making the account less practical for families facing financial instability.
As Hale noted, “The savings accumulation will be even more powerful if individuals continue to contribute beyond the initial $1,000 seed funding from the federal government.”
But she also warned that large-scale access to savings in a still-undersupplied housing market could “push prices higher.”
Who’s Funding It?
According to Trump, the program would be funded through:
- $1.7 trillion in mandatory savings
- Welfare reforms to reduce waste and fraud
- A new 3.5% remittance tax
As the president said during a press conference:
“They’ll really be getting a big jump on life, especially if we get a little bit lucky with some of the numbers.”
The goal is to give Gen Alpha a better chance of reaching milestones like buying a home, but the long-term impact will depend on the details, including how these accounts are regulated and whether families are actually in a position to fund them.
Bottom Line
For real estate professionals, this proposal is worth watching, not for what it might mean tomorrow, but for what it could signal two decades from now.
If implemented well and used consistently, Trump Savings Accounts could give future first-time buyers a running start. But without safeguards and continued contributions, they may do more to widen the wealth gap than close it.
Either way, it’s another sign that affordability concerns aren’t going away and that policymakers are starting to look at long-term solutions for the next generation of buyers.
