Here’s how Trump Accounts could affect women’s retirement savings gap
Bojan’s story | E+ | Getty Images
Trump accounts The campaign, which is officially scheduled to launch on July 4, aims to help the youngest Americans get a head start on building long-term financial security through investing. Whether this will reduce the retirement savings gap facing women is less certain, experts say.
Research shows that although women save more than men, their 401(k) account values are lower. According to Vanguard’s new 2026 report, the average balance among men at the end of 2025 was $194,597, while for women the figure was $146,476. How Does America Save Money? report.
At least part of this is because we earn less on average; 81 cents for every dollar earned by men. Per Ministry of Labor Experts say they are spending more time out of the workforce due to family care. According to the research, three out of every five caregivers are women. 2025 report From AARP and the National Alliance for Care, a nonprofit advocacy and research group.
“While Trump Accounts provide early access to investment and the benefits of compound interest, they cannot solve this problem.” [the problems] “This creates gender disparities in retirement balances,” said Anqi Chen, associate director of savings and household finance at the Boston College Center for Retirement Research.
There could also be an indirect positive effect on women’s retirement savings, said Teresa Ghilarducci, an economics professor at The New School in New York.
Ghilarducci said that’s because “when children have real assets of their own, families face less pressure to solve every crisis arising from the mother’s paycheck, debt or future retirement.”
Some girls face headwinds in childhood
As of mid-June, More than 6 million children are signed up for Trump Accounts, also known as 530A accounts.
Following the launch on July 4, parents, guardians, grandparents and others will be able to contribute up to $5,000 per year in after-tax dollars until the year before the beneficiary turns 18. Babies born with the Trump Account between 2025 and 2028 will receive an initial deposit of $1,000 from the Treasury Department.
Employers are also allowed to contribute up to $2,500 per worker each year; this is part of the $5,000 contribution limit. In addition, qualifying charities as well as state and local governments can make contributions that do not count against the annual limit.
While Trump accounts may help create long-term savings among children in general, they may not eliminate the adversities girls may face in childhood when it comes to parents investing in their futures. A 2017 report from T. Rowe Price found that 50% of parents with only boys set aside funds for their child’s college, compared to 39% of parents with only girls.
Parents of boys are more likely than parents of girls to cover the full cost of college (17% vs. 8%) and are less likely to consider sending their son to a cheaper college to avoid taking out loans, the report found. The T. Rowe Price survey also found that they are more willing to prioritize saving for their sons’ college expenses over their own retirement.
Ghilarducci said the $1,000 seed money offered to newborns regardless of gender, along with the Trump accounts, shows that “every child deserves an asset.” “But family patterns may return after that…a public seed cannot erase personal prejudices.”
In family life, [a retirement account] It can become an emergency fund for children, parents, spouses, and household members.
Teresa Ghilarducci
professor of economics at The New School
Meanwhile, parents with thrifty kids may be less likely to try to solve emergencies at the expense of their own nest egg.
“In family life [a retirement account] it can become an emergency fund for children, parents, spouses and households,” Ghilarducci said.
Among focus group participants in a 2019 survey from retirement services provider TIAA and the Massachusetts Institute of Technology’s AgeLab, women in particular described “the struggle to sacrifice their own financial security in retirement to put their children’s education and well-being first.” to work reader.
Time will tell how the children will use the money allocated for them. While Trump Accounts have different rules than individual retirement accounts, the rules governing traditional IRAs will generally take effect once the beneficiary turns 18.
That means regular tax rates will apply to withdrawals unless the money is already taxed at the time it’s donated, and with some exceptions, withdrawals made before the beneficiary turns 59½ will be subject to a 10% early withdrawal penalty, according to a report published in June. report From the Congressional Research Service.
These exemptions include higher education expenses, up to $10,000 for a first home purchase, $5,000 for the birth or adoption of a child, $1,000 annually for personal emergencies, medical expenses that require a tax deduction, and health insurance premiums while unemployed.
