Key Points
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Australia’s superannuation fund helps ensure workers have money in retirement.
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Only employers are mandated to pay into the superannuation fund.
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U.S. retirement experts warn that switching over to the Australian system would not be an easy fix.
President Donald Trump has said that his administration is examining an overhaul of the U.S. retirement savings system, and that Trump would like that overhaul to be modeled on Australia’s approach. While the president’s details remain fuzzy, he promises the new system — known as superannuation funds — would be better for American workers.
“They have a plan in Australia, which people really like. It’s really worked out very well, incredibly well, and very respected. And we’re going to be talking about that with Congress and see if we can implement it …” Trump was quoted as saying July 6 during a Rose Garden lunch.
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How superannuation works
Superannuation — also called “super” — works by the employer putting an amount equal to a fixed percentage of an employee’s wages into an investment fund solely in their name. Employers are required to make contributions on the employee’s behalf. Unlike in the U.S., Australian workers don’t see this money being taken out of their paycheck. As of 2026, the mandatory contribution is 12% of an employee’s earnings up to $270,830 and must be paid at the same time as their normal salary. In the U.S., the tax rate for Social Security is 6.2% for the employer and 6.2% for the employee.
Like Social Security in the U.S., the worker can generally access the account only upon reaching retirement age or meeting specific conditions, and temporary residents who’ve paid into the system may be able to claim their super after they leave the country as a departing Australia superannuation payment (DASP).
Self-determination
Most employees can compare available super funds and choose the one they want their contributions paid into. If they don’t choose their own, their employer pays into the person’s existing “stapled super fund.” A stapled super fund is an existing account that’s linked (or “stapled”) to an individual employee and follows them as they change jobs. The Australian Tax Office notes that “if you don’t have a stapled super fund, your employer pays your super into a nominated super fund that they choose.”
In addition to employer contributions, Australians can add to their super by making voluntary contributions. Although there are limits on the amount they can contribute annually without incurring additional tax, employee contributions can supersize their super fund.
Has the time for change arrived?
Among the 5 million people with a 401(k)-type plan administered by Vanguard, the median balance in 2025 was just $44,115, far short of the amount most Americans will need to retire. The issue becomes even more pressing when you consider that the Social Security trust fund is set to run dry in 2032. Unless Congress steps in to shore up the system, Social Security recipients can expect benefit cuts of 24%.
No easy fix
Retirement experts caution that adopting the Australian system wouldn’t provide the U.S. with an easy fix. Even if the decision is made to replace the current Social Security system, the government still must determine how to handle the benefits already promised. And if the U.S. started superannuation next year, people’s accounts wouldn’t build up enough to pay for retirement for many years.
There’s also a good chance that higher compulsory employer contributions would spark outrage among businesses, which might decide to pass the contributions they’re forced to pay on to employees through lower compensation.
While we can’t know what Donald Trump is thinking or if he will bring a super plan to lawmakers, it’s possible that the president’s interest in the Australian system is rooted in the fact that employers must make investments for nearly all workers, who get back their own (invested) money when they retire. In the U.S., the system relies on current workers paying for the benefits of those who have already retired.
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7 Comments
I retired at age 70. I had already contributed to social security for 50 years and a 401K for 14 years.
At age 67 I began collecting SS. ( I saved this by putting an equivalent salary amount into my 401K).
My husband retired at 65, collecting only SS. He passed away at age 68. I had the same bills but lost his SS income.
At age 67 (after my husband passed), I continued to work for 3 more years. I was able to save the equivalent of most of my SS in my 401K.
I am now 80, independent, healthy and own a small home. Without BOTH my SS and my 401K, I would be in a seriously different situation. I say, keep both current SS and 401Ks and SAVE. (Please, Find a way to help the widow/widower when the spouse passes… stop/reduce property tax and income tax free SS with no $75K penalty?) Thanks!
Get rid or SS! It’s nothing but a Ponzi Scheme! It keeps running out of money bc it is Not an Investment. If you had put 12+% of your earnings from Day One, like the Aussie plan and just put it in the Dow Jones or S&P market and let it ride, you would have well over a million dollars, probably millions of dollars. SS just pays from money collected by people currently working. It was broke the day it started. That’s why they have to keep changing the ages, the pay-outs, taxing it etc. You have to wait until you are 70 years old to start collecting a full benefit. Not many people live too much longer than that, so when people live longer it strains the SS system. Baby Boomers out number the current young people working, so that puts a strain on the system. It started broken and has been patched up ever since. I collect SS now, so either they will have to increase the amount the current workers put in or cut my benefits. Who do you think that they will side with? SS s a socialist program and Socialism always craps on the old people. That aren’t useful and more.
SS would have been fine, if the government was not running and “borrowing” money from the program without ever paying it back!!! I like the system President Trump is proposing, it keeps governments hands off of the money!!! The person knows exactly how much they have for retirement and can always save on the side as well… But instead of making the employer flip the entire thing, keep it as is for SS, but keep the money out of government’s hands!!!
As an Australian, I can assure you that not everyone believes Super is great. It was never “gifted” as some believe. ALL of the current super percentages were deducted from negotiated wage increases over many decades. In reality it’s now a 12% flat tax on your income that’s gifted to fund managers that are then able to purchase shares in what used to be government/public infrastructure (Literally using your money to buy your own stuff ) whilst lining their own pockets. Super continues wage disparity into retirement, and justifies? the depreciation in value of the age pension that most still need when their superannuation is depleted due to fact that it was never sufficient in the first place.
If SS would get rid of the Doctors that have but thousands of “disabled” drug addicts on SS we may get back to solvency! Also all of the homeless with bad backs and the illegals. Blame the BAD doctors that have made this possible.
SS is just fine the way it is. The money spent on overhauling the tried and true could be better spent on finding and eliminating the Waste, Fraud and Abuse. Get serious on significant jail time for those responsible for those three parasites.
For those that call SS a ‘Socialist Scam’ and wish to eliminate it on that basis, let’s also look at the ‘Personal Income Tax’ an amendment to the ‘Corporate Income Tax’. A purely Socialist and Marxist creation as iterated in Karls’ Manifesto! Let’s spend the money to do away with those two ‘Socialist Scams’.
The truth is all these disfunctional scams are the fault of ‘We the American People’. We elect smiling faces that tell us what we want to hear and then allow themselves to be bought off by the highest bidder to create a well dressed intelligent speaking form of the age old Fuedal, master, slave relationship that was mortally wounded by our ‘Declaration of Independence’. Wounded but not killed!