President Trump Announces 500,000 Children Will Receive First $1,000 in Trump Accounts
President Trump said the government has deposited the first $1,000 into more than half a million “Trump Accounts,” which are designed to give newborns stock market shares and help them build wealth from an early age.
President Donald Trump has said his administration is considering “very seriously” Australia’s retirement system, which would require workers to participate in a 401(k)-like savings program.
What does that mean for the future of our own 401(k)s and what will happen to Social Security?
Retirement experts say America’s retirement system is far from perfect and much of it is in crisis.
Social Security, the nation’s retirement trust fund, could be bankrupt by 2032. And only about half of private sector workers participate in workplace retirement plans that are supposed to supplement Social Security.
Australia’s retirement system is different and perhaps better. Employers are required to pay 12% of all employees’ wages into a 401(k)-style account. The National Pension provides additional income for retirees who do not have enough income or assets to live on.
The Mercer CFA Institute Global Pension Index, an international ranking of retirement systems, gave the United States a C+ in its 2025 report. Australia earned a B+.
“If you were to invent a retirement system from scratch today, you would almost certainly create something like the Australian retirement system,” said Andrew Biggs, a senior fellow at the libertarian group American Enterprise Institute.
What’s so great about retirement in Australia?
Australia’s retirement system is excellent, Biggs and colleagues say. The reason for this is that it protects retirees from poverty while requiring workers to save for retirement. And Australia “still spends significantly less GDP on its own programs than we do,” says Andrew Estruth, director of the Center for Retirement Research at Boston University.
Under the American system, millions of workers have nothing to save for retirement. Social Security protects retirees from poverty, but its costs are unsustainable.
More money is coming out of Social Security than coming in, and the once-abundant cash reserves are dwindling. AARP estimates that if reserves are depleted and no action is taken, federal agencies will have enough money to pay only about 83% of all benefits.
President Trump has repeatedly touted Australia’s retirement system.
“It’s worked really well, incredibly well, and is very well-respected,” President Trump said on July 6 at a White House event to launch the Trump Account, a federal savings program for children. “And we’re going to talk to Congress about it and see if we can do it,” he said.
Why is President Trump studying Australia’s retirement model?
President Trump has not said publicly exactly how the US will leverage Australia’s retirement model. But we can find hints in his executive activities.
Earlier this year, President Trump signed an executive order expanding access to retirement savings for workers whose employers do not offer 401(k)-type plans. The order created a new website, TrumpIRA.gov, that workers can use to enroll in private sector retirement plans. It requires the site to be up and running by January 1, 2027.
President Trump’s order coincides with the Biden administration’s upcoming launch of Saver’s Match, an initiative that would provide low-income workers with matching retirement benefits of up to $1,000 a year starting in 2022.
The TrumpIRA plan is designed to increase the percentage of American workers who save for retirement.
“The president wants to help everyone in the United States get a retirement account, just like every worker in Australia has a retirement account,” said Teresa Ghilarducci, a labor economist at the New School for Social Research.
More states are introducing “automatic savings” programs, expanding access to tax-advantaged retirement plans by encouraging companies to offer them and automatically enrolling employees. Starting in 2025, most new 401(k) plans were required to automatically enroll employees, rather than leaving the decision up to employees.
But this is a far cry from requiring workers to save for retirement, as Australia requires.
What would happen if all workers were required to save for retirement?
Will forced retirement savings work in America? Expert opinions are divided on this question.
Your employer funds your Australian retirement account. But “to say it’s an employer contribution is misleading,” said Romina Boccia, director of budget and rights policy at the liberal Cato Institute. Ultimately, “it comes out of the workers’ wages,” she said.
Boccia said retirement savings will hurt low-income workers who may need their entire paycheck to cover daily living expenses. Many workers who abandon their 401(k) plans “probably have a good reason for doing so,” she says.
Ghilarducci, a labor economist, takes the opposite view. She believes all workers should contribute to retirement savings accounts just as they pay into Social Security.
“This is not a tax,” she said. “It really saves money for your future self.”
AEI’s Mr Biggs said the US could move towards Australia’s model by capping Social Security benefits, which would ultimately result in the federal program being “more focused on low-income people”.
A Washington think tank recently proposed capping annual Social Security benefits for married couples at $100,000 as a way to shore up retirement trust funds.
At the same time, Biggs said the U.S. government could require all workers to enroll in a 401(k).
“If everyone saved enough for retirement, Social Security’s job would be much easier,” he said.
Could the Australian Retirement System replace Social Security?
Other retirement experts say that while tinkering with Social Security may work, replacing it with Australia’s pension system will not.
Australia’s ‘age pension’ is a much more modest benefit than social security. According to an analysis by the Retirement Research Center, by 2025, individuals’ annual payments will reach about $28,000. It is primarily an anti-poverty program. In contrast, Social Security will pay up to $62,172 per year in 2026.
“Moving from the current system to one like Australia’s is not easy,” said Gopi Shah Gowda, director of the Retirement Security Project at the Brookings Institution.
Active workers enroll in Social Security with the expectation that they will receive the same benefits in retirement that retirees receive today. If the US government replaced Social Security with a smaller Australian-style pension, these workers would feel cheated, Gowda said.
“We have already promised benefits to current and former workers and will have to pay them in some way in the future,” she said. “Details are very important here.”
