Ted Cruz Says Trump Accounts Could Replace Social Security. Retirement Pros Are Skeptical.

But Cruz went even further, both in his remarks at the ICI summit and at a conference last week.

"Here's the dirty little secret: Trump Accounts are Social Security personal accounts," Cruz said during the Milken Institute's Global Conference in Los Angeles.

Those with longer memories will remember that privatization of Social Security has been a longtime Republican priority.

"Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account," President George W. Bush said during his 2004 State of the Union address. "We should make the Social Security system a source of ownership for the American people."

Although Bush's initiative was not implemented, Cruz said that the Trump accounts could lead to the eventual adoption of the idea.

"How did we get it done this time?" Cruz said. "It's because we gave the money to babies so the old people didn't get pissed. But babies grow up."

So, what do retirement experts think about this proposal? And what are advisors telling worried clients?

What Experts Say

Marcia Mantell, founder and president of Mantell Retirement Consulting, a retirement business and education consulting company in the financial services industry, said she was "livid" when she read about Cruz's suggestion.

"It infuriates me to see this kind of political shenanigans again," she said.

While noting that Congress needs to act before 2032 when the Social Security old-age trust fund is set to be depleted, she pointed out that the system is not going away.

"There is a solvency problem, and there are a lot of us baby boomers and there aren't as many younger people working and contributing," she said. "But, we don't need another account and we certainly don't need a politicized account."

Mantell doesn't have a problem with the Trump accounts on the surface, she said, but Cruz's proposal is a "bridge too far."

"To then think it's going to be a retirement account or, horribly, be a privatization of Social Security so that we no longer need Social Security … that is just not OK," she said.

Ray R. Harris, a registered Social Security analyst and the founder of Social Security Claiming Experts, said that Cruz is rebranding "privatization" as "ownership," because "privatizing Social Security polls pretty badly."

"But 'personal accounts,' 'ownership,' 'investment growth,' those concepts sound much better," he said.

Further, Harris said, Cruz's rationale is that the Trump accounts are creating a proof of concept.

"His argument is basically once parents see a child's Trump account grow, they may likely ask, 'Why can't my payroll taxes go into something like that?'" he said.

Harris added that Cruz is trying to force the debate early.

"He may be intentionally creating a political conversation that conservatives have wanted for decades, shifting at least a part of Social Security from government-paid benefits to individually owned investment accounts," he said.

That doesn't mean that Trump accounts will replace Social Security today, or ever, said Harris.

"They don't redirect payroll taxes," he said. "They don't change current benefits. … I don't think he's saying grandma's check changes tomorrow. I think he's saying this could change how the next generation thinks about retirement financing."

What Advisors Say to Clients

Even before Cruz's proposal, Andrew Herzog, a wealth advisor at The Watchman Group in Plano, Texas, said that clients have been asking about the viability of Social Security for years.

"The overall opinion on the government program is not confident," he said. "People worry their promised benefits will not be there when they need them most."

Similarly, Charles Thomas, founder of Intrepid Eagle Finance in Clover, South Carolina, said he has very few clients who believe that Social Security will be the same for them as for their parents.

"I doubt it would ever happen as a serious proposal, but I would expect my clients would prefer an account they own over a promise from Uncle Sam," he said. "Our clients skew younger and are very skeptical that Social Security will exist for them."

No one he spoke with had connected Trump accounts and Social Security until Cruz did, said Herzog.

"It's an interesting thought, though, [to] begin changing the cultural conversation to personal ownership in retirement rather than simply defaulting to a Social Security net," he said. "Social Security will undergo a big change in the next few years. We'll see what Congress proposes."

When Thomas works with clients on retirement planning, he focuses on saving enough so that Social Security is not required to support their future lifestyle.

"They often see it as a variable beyond their control as opposed to a promised benefit," he said.