What Trump accounts and Australia’s Super may mean for Social Security

New Trump accounts are set to start giving money to millions of children in mid-2026. Their creation has led experts to speculate whether a similar strategy may be implemented to address another area where Americans may face a financial shortfall — retirement.

The tax-advantaged Trump accounts, which include a $1,000 initial government deposit for some, were created when President Donald Trump signed the “big beautiful bill” into law in July. Lawmakers have said the goal is to help reduce wealth inequality by giving children a jump-start on accumulating assets.

Parents and others can make after-tax contributions to a Trump account of up to $5,000 per year. Children born between 2025 and 2028 will be eligible for the government seed investments. Business philanthropists, including Michael and Susan Dell and Ray and Barbara Dalio, have agreed to provide $250 per child to those who qualify under the terms of their respective donations.

At a Dec. 2 press conference announcing the Dells’ contribution, Trump was asked whether the administration plans to look at other policy proposals to help families. In response, Trump cited Australia’s retirement plan for workers as potential inspiration.

Trump did not elaborate with further details. The White House did not respond to a request for comment.

Experts are divided on how the U.S. might take cues from Australia’s retirement program, which includes both an old-age pension and a mandatory retirement savings system called Superannuation.

Trump’s suggestion comes as the U.S. faces its own retirement dilemmas.

Of baby boomers, just the top 30% income earners are financially ready for retirement, according to recent research from Vanguard. Other low- and middle-income members of that generation may likely have to rely on Social Security, according to the firm.

Yet Social Security’s trust fund that contributes to retirement benefits faces imminent depletion in less than a decade. If Congress does not act by the fourth quarter of 2032, those benefits may be cut by 24%, based on projections from the Social Security Administration’s chief actuary.

Workers who have access to defined contribution plans like 401(k)s are twice as likely to achieve their financial goals for retirement, according to Vanguard. Vanguard’s research finds that 4 in 10 Americans may be able to maintain their lifestyles in retirement. If all Americans had defined contribution plans, that would move to 6 in 10 Americans, according to the firm.

Currently, 72% of U.S. private sector workers have access to retirement benefits, according to the Bureau of Labor Statistics, based on data as of March. The survey represented 126.9 million total private industry workers, according to BLS.

In Australia, an estimated 17 million individuals have Super accounts, covering most workers. Australian employers are required to contribute 12% of a worker’s earnings, and individuals can opt to make additional contributions. The country’s Superannuation system began obligatory payments in 1992 at 3% of earnings.

As of September, Australia’s retirement system had approximately $4.5 trillion in Australian dollars in assets. Now the fourth largest retirement system in the world, it is projected to surpass the United Kingdom and Britain to take the second slot by 2031, according to the Super Members Council, an advocacy organization for Australians with savings in superannuation funds.

Australia’s retirement system has two parts, according to Andrew Biggs, senior fellow at the American Enterprise Institute, a conservative public policy think tank: Superannuation’s universal retirement savings plans, which represent the mandatory savings component, and an age pension, a means-tested benefit that operates much like Supplemental Security Income, or SSI, benefits in the U.S. To be eligible for U.S. SSI benefits, individuals must have little or no income and resources and be age 65 and over or have a disability or blindness.

As the Superannuation system grows and the retirement accounts mature, Australians gradually rely less on the means-tested pension, Biggs said.

The same dynamic could help encourage retirement savings and alleviate pressure on Social Security, according to Biggs.

“If every worker were saving for retirement, wouldn’t that make Social Security’s job easier?” Biggs said.

The question is how to achieve that goal.

In 2021, Teresa Ghilarducci, a professor at The New School for Social Research, co-authored a research paper with fellow economist Kevin Hassett, who now serves as director of the National Economic Council, that called for a new plan modeled on the Thrift Savings Program.

The TSP, a defined contribution program for federal employees and members of the armed services, succeeds in offering low expense ratios, or annual fees, due to its bargaining power, which leads to higher projected returns compared to IRAs or 401(k)s, Ghilarducci and Hassett wrote.

Meanwhile, matching and automatic enrollment have boosted TSP plan participation.

If a similar plan were offered to everyone — along with government matches and prospective private employer matches — millions of Americans, including low- and middle-income households, could see a “significant infusion of wealth,” according to Ghilarducci and Hassett.

Among average households in the poorest 25% of the wealth distribution, the economists estimated in their 2021 research that 40 years of TSP participation could provide retirement account balances between $138,000 and $610,000 before fees and taxes. The prospective balances range based on government matches and prospective rates of return.

“Our idea was a wealth account that would follow workers throughout their whole career and at the end … would be turned into a lifelong annuity,” Ghilarducci said in an interview.

“Every American should have a complementary private account to supplement their Social Security,” she said.

Today, there is a bipartisan bill in Congress aimed at achieving that goal.

The Retirement Savings for Americans Act would create portable, tax-advantaged retirement savings accounts for full- and part-time workers who do not have access to employer-sponsored retirement plans. Eligible workers would be automatically enrolled to contribute 3% of their income, an election that they could change. Low- and moderate-income workers would receive a 1% government contribution and up to 4% through a refundable federal tax credit.

Another Democratic bill reintroduced on Monday, the Automatic IRA Act, would require employers that do not provide retirement plans and have more than 10 employees to enroll workers in automatic IRAs, which allow employees and employers to contribute through payroll deductions, or other retirement plans. The cost to smaller employers would be offset by a new auto IRA tax credit for those businesses.

That proposal is inspired by state auto IRAs, which have enabled 1 million workers to save $2 billion since the first such programs launched less than a decade ago, according to research from Pew Charitable Trusts.

One plan called myRA, started under President Barack Obama, tried and failed to create a federal-level effort to boost retirement savings. One reason why it didn’t work was that it didn’t automatically enroll workers, according to the Urban Institute, a Washington, D.C.-based think tank. Consequently, low enrollment led the Treasury Department to decide that the costs of running the program were too high.

While Australia’s retirement system could be an inspiration, some experts say they worry it’s too late for the U.S., which already faces its own demographic and funding challenges as the baby boom generation ages. The largest number of Americans in history is currently turning 65, with more than 4.1 million Americans expected to reach that age milestone every year from 2024 through 2027, according to the Alliance for Lifetime Income.

“If you were starting from scratch, setting up a defined contribution plan that looked similar to the Australian system wouldn’t be such a bad idea,” said Romina Boccia, director of budget and entitlement policy at the Cato Institute, a libertarian Washington, D.C., think tank.

Biggs said enacting a plan to help alleviate Social Security’s burdens could be a no-brainer, yet would require political courage from elected leaders who may not want to rock the boat.

At a February event, Treasury Secretary Scott Bessent said Australia’s sovereign wealth fund has “regularity, sustainability and trajectory” that are “preferable.” But creating such a fund in the U.S. would be difficult, according to Boccia, since it would likely be funded with debt rather than assets.

Americans do currently have other options to save through private IRAs, Boccia said. The state auto IRAs may help more individuals set up the accounts, including those who may not meet brokerage firm minimums, she said.

Rather than focusing on new ways to promote individual savings, the focus should be on reforming Social Security, she said.

“The retirement crisis we have is that the government has promised benefits that it’s not able to pay,” Boccia said.

Ghilarducci, who hopes to see her idea of complementary accounts to Social Security come to fruition, also said the program should be an urgent priority: “The end of Social Security is the story of the next six years.”