Economists and policymakers are increasingly looking toward Australia’s retirement infrastructure as a potential blueprint for the United States. The Australian model, which requires workers to participate in a mandatory savings program similar to a 401(k), has drawn significant interest from President Donald Trump. During a July event launching the federal “Trump Accounts” savings program for children, the president stated that his administration is looking “very seriously” at the Australian system, noting that it is “incredibly well and very respected” and that he intends to discuss potential implementation with Congress.
The interest in international alternatives comes as the U.S. faces a looming crisis regarding its own retirement security. The national Social Security trust fund is currently projected to reach insolvency by 2032. Furthermore, only about half of private-sector workers in the U.S. participate in workplace retirement plans designed to supplement Social Security. The Mercer CFA Institute Global Pension Index underscored these challenges in its 2025 report, awarding the United States a C+ rating, while Australia received a B+.
Australia’s system is structured around a mandate requiring employers to contribute 12% of an employee’s wages into 401(k)-style accounts. Additionally, the country maintains a national pension specifically designed to provide supplemental income to retirees who lack sufficient assets. Proponents argue this approach is superior because it effectively protects retirees from poverty while requiring consistent personal saving. Andrew Eschtruth, director of the Center for Retirement Research at Boston College, noted that Australia manages to achieve these outcomes while spending a smaller percentage of its GDP on its program compared to the U.S.
Andrew Biggs, a senior fellow at the American Enterprise Institute, suggested that if the U.S. were building a system from scratch today, it would likely mirror the Australian approach. He proposed that the U.S. could transition by capping Social Security benefits to focus resources on lower earners, while simultaneously mandating 401(k) enrollment for all workers. The Committee for a Responsible Federal Budget has similarly suggested capping annual Social Security benefits at $100,000 for couples to help stabilize the fund.
The administration has already begun taking steps to broaden access to retirement savings. An executive order signed earlier this year aims to assist workers whose employers do not offer 401(k) plans by creating a new portal, TrumpIRA.gov, which is scheduled to be active by January 1, 2027. This initiative complements the “Saver’s Match,” a 2022 program that provides up to $1,000 annually in matching contributions for lower-income workers. Teresa Ghilarducci, a labor economist at The New School for Social Research, noted that these efforts align with the goal of ensuring every American worker has a retirement account.
Despite the potential benefits, experts remain divided on whether a mandatory savings model is viable for the U.S. Romina Boccia of the Cato Institute warned that mandatory contributions could place an undue burden on low-income workers who rely on their full paycheck for daily expenses, noting that employer contributions ultimately derive from worker wages. Conversely, Ghilarducci argued that mandatory contributions are not a tax but a necessary mechanism for future security.
Replacing Social Security entirely with an Australian-style pension presents significant hurdles. The Australian “Age Pension” is primarily an anti-poverty program with lower benefit caps; in 2025, annual payments for an individual topped out at approximately $28,000. In contrast, U.S. Social Security benefits can reach up to $62,172 annually as of 2026. Gopi Shah Goda, director of the Retirement Security Project at the Brookings Institution, cautioned that a transition would be complex. She noted that because current workers have contributed to Social Security with the expectation of future benefits, moving to a smaller, pension-style system could leave many feeling cheated, as the government has already promised specific benefits that must be honored. The report also notes that what does that mean for the future of our own 401(k)s. The report also notes that retirement experts say, and a big piece of it is in crisis, america’s retirement system is far from perfect. The report also notes that and a once-plentiful cash reserve is dwindling, more money is going out of Social Security than coming in. The report also notes that if nothing is done, the federal agency will have sufficient funds to pay only about 83% of full benefits, according to an estimate from AARP, when the reserve runs out. The report also notes that incredibly well and very respected,” Trump said at a July 6 White House event to launch Trump Accounts, the federal savings program for children, it’s really worked out very well. The report also notes that it calls for the site to be active by Jan.
