{"id":4008,"date":"2026-07-23T05:40:44","date_gmt":"2026-07-23T05:40:44","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=4008"},"modified":"2026-07-23T05:40:44","modified_gmt":"2026-07-23T05:40:44","slug":"trump-said-australias-system-worked-out-very-well-with-200000-saved-by-67-so-why-didnt-he-apply-that-model-to-trump-accounts","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=4008","title":{"rendered":"Trump said Australia\u2019s system \u2018worked out very well\u2019 with $200,000 saved by 67 \u2014 so why didn\u2019t he apply that model to Trump Accounts?"},"content":{"rendered":"
\n

President Donald Trump has pointed to Australia as an inspiration for his proposal to strengthen Americans\u2019 long-term financial security by offering US$1,000 savings accounts to newborn babies \u2013 and it\u2019s not hard to see why.<\/p>

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Over the past three decades, Australia has built one of the world\u2019s largest retirement savings pools through compulsory superannuation, holding A$4.44 trillion (US$3.1 trillion) on behalf of workers by March 2026.<\/p>

<\/div><\/div><\/div>\n

The US, by contrast, faces a more fragile retirement outlook. Social Security\u2019s main retirement trust fund is projected to run out of reserves in late 2032. After that, incoming revenue would cover only about 78% of scheduled benefits.<\/p>\n

Trump\u2019s comments about an Australian-style retirement system remain short on detail. One part of his broader savings agenda, however, is already law: Trump Accounts for children.<\/p>\n

How do the Trump baby accounts work?<\/h2>\n

\u201cTrump Accounts\u201d, introduced this month, are investment accounts intended to give children a financial head start.<\/p>\n

Eligible US children born between 2025 and 2028 can receive a one-time US$1,000 government contribution, but the family needs to apply. Families and friends may contribute, while employers can also make tax-advantaged contributions, subject to modest annual limits of US$5,000.<\/p>

<\/div><\/div>\n

The money is invested in a default low-cost index fund at launch, with other low-cost index fund options to be added. The savings generally remain locked away until age 18.<\/p>\n

These are not conventional retirement accounts at the start. Their link to retirement comes later. From age 18, the account begins operating under rules similar to those that apply to a traditional individual retirement account known as IRAs, the vehicle many US adults already use to save for later life.<\/p>

<\/div><\/div><\/div>\n

Trump Accounts do not replace Social Security, 401(k)s or individual retirement accounts. They sit alongside them as another way to build long-term savings.<\/p>

<\/div><\/div>\n

Australia\u2019s retirement system is different<\/h2>\n

Australia has no equivalent national scheme for children. Parents can open a savings account for a child, buy shares on their behalf, or make after-tax contributions to a child\u2019s superannuation fund. But these are private, voluntary choices, rather than a program like the Trump Accounts giving eligible US families the option to apply for an account for their child.<\/p>

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<\/div><\/div>\n

To understand what has attracted Trump\u2019s attention, we need to look beyond the children\u2019s accounts to the system Australia built for workers.<\/p>\n

Australia\u2019s retirement system has two parts. The Age Pension is a means-tested, government-funded safety net for older Australians with modest means.<\/p>\n

Superannuation does . It builds private retirement wealth through compulsory employer contributions, generally 12% of a worker\u2019s salary, to provide income in retirement. That money is professionally managed in diversified investment funds.<\/p>\n

The system began in the 1990s with an employer contribution at a 3% rate, and has gradually been increased over the years since.<\/p>

<\/div><\/div><\/div>
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It is now the world\u2019s fourth-largest pension pool and is projected to become the second-largest by 2031, behind only the US.<\/p>\n\n

\"Couple<\/figure>\n
Australia\u2019s retirement system is built on a mix of government pension and private superannuation accounts. Robert Lang Photography\/Getty Images<\/figcaption>\n

Voluntary vs compulsory savings<\/h2>\n

The US Social Security system \u2013 in which today\u2019s workers fund today\u2019s retirees through payroll taxes \u2013 is much closer to Australia\u2019s Age Pension than to superannuation.<\/p>

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The closest US equivalent to superannuation is the combination of 401(k)s and individual retirement accounts. Trump Accounts will later become part of that private savings system.<\/p>\n

The important difference is that participation in the US is voluntary. Unlike Australia, employers are generally not required to contribute.<\/p>\n

In fact, Trump Accounts and Australian super are not even designed to do the same job. One starts in childhood, building a financial asset from an early age. The other starts when people enter the workforce and builds retirement savings over an entire career.<\/p>\n

The real distinction is in how money flows into the account. After the US government\u2019s initial US$1,000 contribution, the growth of a Trump Account depends purely on voluntary contributions.<\/p>\n

There is good reason to question whether those contributions will arrive at scale. Many US households already struggle to maintain emergency savings, let alone contribute thousands of dollars each year to a child\u2019s investment account.<\/p>\n

Wealthier households may contribute regularly. Many others may contribute little beyond the initial deposit.<\/p>\n

Saving over a lifetime<\/h2>\n

Australia solved this problem differently. As long as someone remains employed, employers are generally required by law to keep contributing. Money flows into the worker\u2019s account throughout a working life, whether or not the worker actively chooses to save extra from each pay.<\/p>\n

For an Australian at the retirement age of 67, the average super balance is about A$279,700 (US$196,000).<\/p>\n

That steady flow of compulsory contributions, rather than the account itself, is what built Australia\u2019s vast retirement savings pool.<\/p>\n

Australia\u2019s real innovation was not inventing another account. It was making retirement saving a routine, almost automatic consequence of having a job.<\/p>\n

Trump says Australia\u2019s system has \u201cworked out very well\u201d, and he may well be right.<\/p>\n

But the lesson from Australia is probably not the account itself. It is the contribution mechanism that keeps money flowing into it year after year.<\/p>\n

Australia did not accumulate trillions of dollars because it invented another account. It accumulated this giant pool of savings because employers are required to contribute to those savings accounts year in, year out \u2013 rather than just having a one-off government payment when a child is born.<\/p>\n

Kris Iyer, Senior Lecturer in Finance and Economics, Torrens University Australia<\/em><\/p>\n

This article is republished from The Conversation under a Creative Commons license. Read the original article.<\/em><\/p>

Read more Anthropic and SpaceX just handed Google the biggest profit quarter in company history\u2014on paper<\/a><\/p>\n\n

\"The<\/figure>\n\n<\/figurlazyload><\/div>","protected":false},"excerpt":{"rendered":"

Australia’s mandatory 12% employer contributions built that balance over a working lifetime. 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