A Retirement Fix For 69 Million American Workers: Australia Inspired

Australia is often cited as a model for U.S. retirement policy. And for good reason. The Retirement Savings for Americans Act (RSAA) would get us closer to an ideal retirement system.

Australia gets good grades especially for integrity in a well-known survey of world pension systems and the U.S. persistently gets C’s on adequacy, integrity and sustainability.

Australia’s pension system works because it was built for institutions very different from those in the United States.

The key lesson for U.S. policymakers is not to copy Australia wholesale, but to recognize that its best features already exist in a serious bipartisan proposal: the Retirement Savings for Americans Act (RSAA). Supported by AARP, small businesses, worker advocates, and gig-economy platforms, RSAA would fill the largest gap in the U.S. retirement system.

The homegrown RSAA would create universal, portable, professionally managed retirement accounts for workers whose employers do not offer a plan. It is far closer to Australia’s “superannuation” system than to America’s fragmented 401(k) landscape.

Like Australian Supers, RSAA accounts would follow workers from job to job, pool assets for low-cost investment, and remove the burden of individual financial sophistication from workers least able to bear it.

That similarity matters. It means the U.S. does not need to reinvent retirement policy. It needs to finish it.

Australia Provides Universal Employer-Funded Retirement Saving, The U.S Does Not

Australia’s system rests on one central pillar: the Superannuation Guarantee. Australia mandates employer contributions of 11% of wages (rising to 12%), while U.S. employers are not required to offer or contribute to any retirement plan.

The obligation falls on employers, not workers, and it applies broadly across the labor market.

By contrast, in the United States, and many people with pensions are shocked to find out, employers are not required to offer or contribute to a retirement plan at all.

Roughly half of American workers have no access to a workplace retirement plan. This savings shortfall is not because Americans fail and decide not to save, but because their employers do not offer a retirement plan at work. Economic Innovation Group (I work closely with and approve of their research methodology) find 69 million workers (55.5%) lacked any employer-provided retirement plan in 2021 among 51.6 million workers earning $42,200 or less, 79.4% (a whopping 41 million) lack access to an employer plan. They are basically left out of the American financial markets and the wealth-creating part of the capitalist system. They would be eligible for the “American Worker Retirement Plan” and have the government pay for part of their contribution. RAND Corporation finds paying a little now would be cheaper than alleviating old age poverty of millions later.

At the same time, the U.S. does mandate both employers and employees contribute 6.2 percent of wages (12.4 percent total) to fund Social Security — a defined benefit that provides inflation-protected, lifetime income.

This institutional contrast is crucial. Australia relies heavily on advance-funded individual accounts because it never developed a robust, universal Social Security–style system. The U.S. did. Social Security is Americas strength, not a weakness. It is just that Social Security is not enough.

RSAA Fits American Workers’ Needs

My “Worker Retirement Account” fund (provided for in the RSAA) would be American workers’ Super in addition to any DB pension or 401(k). Worker Retirement Accounts would be individual, portable , and government-administered for low fees and transparency and complement to Social Security. Having Social Security as a base and the proposed universal Worker Retirement accounts would garner the United States an A+ retirement system.

If all U.S. workers had Social Security plus a universal, professionally managed, advance-funded account like RSAA, retirement portfolios would be more diversified and more resilient than Australia’s.

The RSAA accounts together with Social Security would provide longevity insurance, inflation protection, and wage-indexed benefits—features that individual accounts do not deliver well. Advance-funded accounts, in turn, build capital and supplement income.

(Australia’s system is more exposed to market risk because it lacks a strong public pension floor)

RSAA avoids that mistake. It builds on Social Security rather than trying to replace it.

There is also a political lesson. Australia’s system works because contributions are mandatory and automatic. Voluntarism has sunk American workers – so many people don’t have decent any substantial retirement accounts Social Security accounts.

The Australia-Informed Retirement Solution: Not Australia-Lite

Australia’s most pressing retirement problems are instructive warnings. Balances are highly unequal; many Australia workers, especially women reach retirement without enough savings. And the Australian the system relies on lump-sum withdrawals, which undermines lifetime income security. Fees and financial complexity remain persistent problems.

The U.S. should not copy Australia’s reliance on individual drawdown decisions, nor should it weaken Social Security under the assumption that individual accounts can do the job alone.

The American Retirement Crisis Lies In Changing Systems Not Humans

We need universal retirement accounts because Social Security alone is not enough to maintain living standards in retirement. Replacement rates are modest. A middle class worker gets about 38% of preretirement benefits from their Social Security benefit. Less if they retire before age 70. And the system is under political pressure because it is only partially funded until Congress acts.

It was always unrealistic to expect individuals on their own to through voluntary saving to save enough . According to experts (many of us refer to Aon’s “Real Deal” report) a typical American worker would need to save roughly 10 – 15 percent of pay consistently (even when not working) over 40 years starting in their mid-20s in funds with low fees and good risk-adjusted returns to maintain pre-retirement living standards in old age. Conditions millions of workers never experience. We have run this voluntary experiment for 40 years and it hasn’t worked.

And blaming Americas for not saving is wrong-headed. Australia solved the ‘not-saving’ problem with good design, not different kinds of humans. RSAA helps workers save by guaranteeing access and default contributions for uncovered workers, without dismantling Social Security.

RSAA, Trump Baby Accounts, And The Power Of Time

One underappreciated advantage of RSAA is its compatibility with other policy ideas, including the “Trump accounts” or child savings accounts.

RSAA accounts would be an ideal destination for Trump Account funds..

A contribution made at birth has extraordinary power because of compound interest. A modest initial deposit, invested professionally and left untouched for decades, can meaningfully improve retirement security. These features are especially important for children born into families with little or no wealth. RSAA provides the institutional infrastructure to make that promise real, rather than symbolic.

A Better System Than Australia’s Because It Fits America

If the United States took the best pages from Australia’s playbook which includes universal coverage, professional management, portability; and, American policy makers combined it with what America provides in Social Security, the United States would have a superior retirement income system.

RSAA does exactly that. It does not ask workers to become financial experts. It does not punish people for working in small firms or changing jobs. And it does not weaken the single most effective retirement program the U.S. has ever built.

Australia shows us that universality matters. RSAA shows us how to achieve it the American way.

If the United States adopts Australia’s coverage and portability strengths through the Retirement Savings for Americans Act (RSAA) and simultaneously fixes Social Security’s adequacy and financing weaknesses, we can reduce old-age poverty and deliver a retirement system that works for ordinary workers rather than only for those lucky enough to have a good employer plan.

Australia’s “Super” accounts take their name from superannuation, a term that literally means removal from service. The word carries both a neutral administrative meaning and an implicit judgment about obsolescence. For workers it can mark earned exit; for employers it often reflects a decision that experience has become too costly to retain.

The U.S. system assumes a worker starting in their mid-20s will save 10–15% of pay for four decades, accumulating roughly 11 times final earnings by age 67, to maintain living standards alongside Social Security. In practice, Americans expect to retire at 66 but leave the labor force around 61 on average, largely due to health shocks, job loss, or age discrimination, according to Gallup. By their early 60s, many have no retirement savings at all; among those who do, the median balance is under $200,000, which is why only a small minority are on track.