There may soon be a new Social Security program that will provide cash assistance to millions of Americans who have completed high school. Every child born in the United States would have an investing account if the American Dream Accounts Act, which was introduced by Representative Dean Phillips of Minnesota, were to pass.
After completing high school or earning their GED, young Americans could have access to up to $25,000 thanks to this historic bill. The law predicts that by the time an individual is eligible to access the money, they will have earned around 10 percent annually, which means that most Americans will have $25,000 available when they reach maturity.
Additionally, the bill would enable students to monitor the performance of their investment portfolios via a mobile application, which may be crucial in assisting young adults in achieving financial independence, making a down payment on a property, funding their education, or even launching their own business.
$25,000 for High School Graduates Under this New Social Security Program
Serving Minnesota’s third congressional district, US Representative Dean Phillips introduced a new plan under the Social Security program that would provide all US citizens with about $25,000 upon high school graduation or GED certification. People with impairments might not be required to have a high school diploma or a GED.
The American Dream Accounts Act, a new Social Security law, would open investment accounts for all newborns in the US with a $5,000 balance invested in index funds if it is approved by the US Congress.
By assuming 10% annual returns, the bill estimated that by the time people are able to access the money, their initial investments would have increased to $25,000. A potential $10,000 bonus will also be available to Peace Corps or AmeriCorps members under the planned Social Security Administration initiative.
Who will qualify for Social Security $25,000 Benefit?
The program targets service personnel and graduates in an effort to promote education and community service, two important factors that contribute to success. People who want to be eligible for this benefit must:
- Graduate from High School or Receive a GED: Only after earning a GED or a diploma will the initial deposit in their Social Security account be available. This program promotes learning and individual growth.
- Participants in AmeriCorps or Peace Corps: In recognition of their service contributions, these individuals are also eligible for a bonus payout of $10,000.
Flexibility in Spending
After graduation, young adults would have the freedom to spend the money however they see fit to improve their futures. The proposal would let young Americans decide how best to invest in their futures, whether that means establishing a business, paying for education, or making a down payment on a home. To further encourage public service and give more financial resources to those who choose to pursue these avenues, Peace Corps and AmeriCorps volunteers would also get a $10,000 bonus payout as part of their service.
Making Financial Literacy a Priority From the Start
In US homes, one of the main causes of the current economic crisis is financial illiteracy. According to a 2023 National Financial Educators Council survey, Americans lost an average of $1,506 per person, or over $388 billion, as a result of their ignorance of basic financial concepts.
On the other hand, the new Social Security program can help younger generations learn how money works, build wealth, and make responsible purchases. Through applications, the bill allows kids to track the performance of their investment portfolios, which can help them plan how to utilize the funds as adults, such as for college expenses or a down payment on a home.
Since more people have been using credit throughout time due to its ease of access, flexible payback periods, and high cost of living, the program is anticipated to provide a means for young Americans to have enough money during their formative years to invest and pay off any debts.
Funding this program can be challenging
There are new prospects brought about by the American Dream Accounts Act, but there is also rising fear about Social Security’s future. By 2033 or 2034, the major trust fund that provides Social Security payouts may be exhausted, according to current predictions. The guaranteed payments for pensioners and people with disabilities may be reduced by 20% as a result of this depletion.
Funding the program may encounter several obstacles, despite the program’s goal of providing Americans from all backgrounds with equal opportunities to attain financial independence. The Social Security Administration’s proposal to provide $5,000 to every newborn in the US could take time and have a big effect on the Social Security Trust Fund, which could be drastically reduced by 2037 if the US Congress doesn’t take action.
Only 76% of scheduled payments will be paid to retirees and people with disabilities who receive Social Security checks if no decisions are made. According to the Social Security Board of Trustees, increasing the combined payroll tax rate to 14.4% or immediately reducing benefits by 13% would be sufficient to guarantee full benefit payments for the ensuing 75 years.
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Juniper Leena is a lawyer and finance graduate. She loves to write articles about the USA economy and social security. In her free time, she enjoys playing chess. She is the head of the writing team at Fort Hunt Herald and reports to Niamh Prescott. She also completed her MBA in finance in 2018.