When President Donald Trump told reporters on last week that he was looking “very strongly” at Australia’s retirement system, most Americans probably shrugged and thought, “Great â another retirement plan.”
They shouldn’t.
If this idea becomes legislation, it could represent the biggest shift in American retirement policy since Social Security was signed into law in 1935. Dont be surprised if the Trump name is on the retirement account if it happens.
The important thing to understand is this main point: Trump isn’t talking about copying Australia. He’s talking about taking what works and making it “sharper” for America.
So what exactly is he trying to accomplish?
Our retirement system was built for an economy that barely exists anymore.
People used to work for one employer for 30 years, receive a pension, collect Social Security, and retire. Social Security was built for people to claim it at 65 and live to about 70. Thats gone. People are lucky if they work at the same company for five years, let alone 30, and pensions are nearly gone. And we know the savings rate in America is an abysmal 2.6%.
Today, Americans change jobs every few years. Millions work as freelancers, independent contractors, Uber drivers, or for employers that don’t even offer a 401(k).
Meanwhile, too many workers have little or nothing saved for retirement. That’s the backdrop for Trump’s comments.
Australia requires employers to contribute a percentage of an employee’s wages into an individual retirement account known as a “Super.”
The worker owns the account. The investments stay invested. The account follows the employee from job to job.
The result?
Australia has built one of the world’s largest retirement savings pools relative to the size of its population. There is a constant flow of capital into the markets. Trump likes that thought.
That isn’t an accident. It’s the result of automatic, long-term investing.
If I were advising the administration, I wouldn’t simply copy Australia. I’d build an American version around three principles.
First, keep Social Security as the foundation. Second, create a portable retirement account that belongs to the worker, not the employer. Third, require or strongly encourage automatic retirement contributions into privately managed investment accounts.
Instead of relying almost entirely on future government benefits, Americans would retire with assets they actually own. That is the three-legged stool of retirement. That is a fundamentally different philosophy.
This isn’t just about retirement. It’s about ownership. America faces three long-term challenges simultaneously.
Social Security’s long-term financing pressu
