Trump accounts are a ‘worthwhile investment for all Americans’: Charles Payne
President Donald Trump, from the Oval Office, rings the NYSE and NASDAQ opening bells to launch tax-deferred ‘Trump Accounts’ for newborns. Fox Business host Charles Payne champions the initiative, stating it fosters entrepreneurial spirit and broadens stock market participation among Americans. This initiative aims to increase the small percentage of Americans with investment accounts.
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When President Donald Trump told reporters last week that he was looking “very strongly” at Australia’s retirement system, most Americans probably shrugged and thought, “Great — another retirement plan.”
They shouldn’t.
If this idea becomes legislation, it could represent the biggest shift in American retirement policy since Social Security was signed into law in 1935. Don’t be surprised if the Trump name is on the retirement account if it happens.
TRUMP LOOKING ‘VERY STRONGLY’ AT AUSTRALIA-STYLE RETIREMENT SYSTEM: ‘TAKING THAT, MAKING IT SHARPER’
The important thing to understand is this main point: Trump isn’t talking about copying Australia. He’s talking about taking what works and making it “sharper” for America.
So what exactly is he trying to accomplish?
America has a retirement problem
Our retirement system was built for an economy that barely exists anymore.
People used to work for one employer for 30 years, receive a pension, collect Social Security and retire. Social Security was built for people to claim it at 65 and live to about 70. That’s gone. People are lucky if they work at the same company for five years, let alone 30, and pensions are nearly gone. And we know the savings rate in America is an abysmal 2.6%.
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Today, Americans change jobs every few years. Millions work as freelancers, independent contractors, Uber drivers or for employers that don’t even offer a 401(k).
America has done an excellent job creating opportunities to save. We haven’t done a very good job making sure people actually do it.
Meanwhile, too many workers have little or nothing saved for retirement. That’s the backdrop for Trump’s comments.
What Australia does differently
Australia requires employers to contribute a percentage of an employee’s wages into an individual retirement account known as a “Super.”
The worker owns the account. The investments stay invested. The account follows the employee from job to job.
The result?
Australia has built one of the world’s largest retirement savings pools relative to the size of its population. There is a constant flow of capital into the markets. Trump likes that thought.
That isn’t an accident. It’s the result of automatic, long-term investing.
What an American version could look like
If I were advising the administration, I wouldn’t simply copy Australia. I’d build an American version around three principles.
First, keep Social Security as the foundation. Second, create a portable retirement account that belongs to the worker, not the employer. Third, require or strongly encourage automatic retirement contributions into privately managed investment accounts.
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Instead of relying almost entirely on future government benefits, Americans would retire with assets they actually own. That is the three-legged stool of retirement. That is a fundamentally different philosophy.
Why Trump may be interested
This isn’t just about retirement. It’s about ownership. America faces three long-term challenges simultaneously.
Social Security’s long-term financing pressures. Will we really run out of money in 2034?
