New Trump accounts are set to start giving money to millions of children in mid-2026, with the goal of helping reduce wealth inequality by giving children a jump-start on accumulating assets. 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.
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.
Expert Insights on Retirement Savings
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. 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.
Australia’s Superannuation System
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.
Proposals for New Retirement Accounts
In 2021, Teresa Ghilarducci, a professor at The New School for Social Research, co-authored a research paper with fellow economist Kevin Hassett, 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.
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.
Prioritizing Social Security Reform
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.
Rather than focusing on new ways to promote individual savings, the focus should be on reforming Social Security, according to Romina Boccia, director of budget and entitlement policy at the Cato Institute, a libertarian Washington, D.C., think tank. “The retirement crisis we have is that the government has promised benefits that it’s not able to pay,” Boccia said.
Read more about the potential impact of Trump accounts and Australia’s Superannuation system on Social Security Here
Smart Tip for Readers
To take control of your retirement savings, consider consulting with a financial advisor to create a personalized plan that aligns with your goals and risk tolerance. By starting early and making consistent contributions, you can work towards securing a more stable financial future.
