The MAGA Baby Account: Long-Term Impact for Families and Local Economies

07/03/2025

Congress just passed a bill that could quietly reshape the financial future of the next generation. Known as the MAGA Account (renamed “Trump Account”), the program sets up a $1,000 investment account for every child born in the United States from 2025 through 2028.

The funds are automatically deposited and invested in a low-cost, diversified U.S. equity index. Parents don’t have to apply or manage anything. It’s automatic and universal. But the real power comes when families make modest contributions alongside the government.

Here’s what it means in dollars and impact.

Program Scope

• Children born from 2025 to 2028 are eligible

• Roughly 3.6 million births per year

• That’s 14.4 million children total

• The government contributes $1,000 per child, totaling $14.4 billion

Growth of the $1,000 Government Seed Alone

Assuming a 10% average annual return (the historical S&P 500 average), that $1,000 grows to:

• $5,559 by age 18

• $20 billion released per year starting in 2043

• $80 billion in total released from 2043 to 2046 as each cohort matures

That’s without a single dollar added by the family.

What Happens When Families Add $100 per Month

We selected the $100/month contribution level based on national data from 529 college savings plans and real-world family saving habits. Many families contributing to 529s fall in the $80 to $250 per month range. $100/month represents a realistic middle ground that’s affordable for many working-class households, but still meaningful over time.

If families contribute just $100 per month from birth until age 18:

• Total contributions = $21,600 per child

• Future value at 10% return = $54,700 per child

• Annual capital released = $197 billion per cohort

• Total value released from 2025–2028 births = $788 billion

This turns modest, consistent savings into real capital that can be used for college, housing, or launching a business.

Where the Money Goes

As 18-year-olds begin to access these funds between 2043 and 2046, the money will move into the economy through five main channels:

• Education – tuition, books, laptops, certifications

• Housing – first apartments, rent deposits, furnishings

• Transportation – used cars, insurance, public transit passes

• Small business formation – freelance work, services, start-ups

• General spending – clothing, technology, travel, food

Local Economic Impact

Each year, about $197 billion would be released into the hands of young adults nationwide. The spending power is significant on its own, but the actual economic impact is even larger due to what's known as the multiplier effect.

When a dollar is spent—on tuition, rent, or business supplies—it doesn’t stop there. It becomes income for someone else (a landlord, a teacher, a vendor), who then spends it again. Economists estimate that consumer-directed local spending typically has a multiplier effect of 1.3 to 1.8 times, depending on the region and sector.

We use a conservative 1.5x multiplier in our modeling. This means:

• $197 billion spent could generate up to $295 billion in total economic activity per year

• Over four years, that could mean more than $1.1 trillion in GDP impact

These dollars go further in lower-cost areas, so rural communities and working-class suburbs are likely to see the biggest relative lift.

The Bottom Line

The MAGA account program creates long-term, tax-advantaged investment accounts for every newborn in the country. Alone, the $1,000 seed is a decent start. With consistent $100/month contributions, account values can grow to more than $54,000 by age 18.

More importantly, this wealth will be released directly into communities at a time when it can do the most good—just as the next generation of workers, students, and entrepreneurs are stepping into adult life.

Notes: This information is for educational purposes and should not be considered financial advice. Consult with a financial advisor for personalized guidance.

DISCLOSURES

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