After turning the page on his self-indulgent USA250 bonanza, marred by extreme heat and disappointing attendance, President Trump has once again set his sights on Americans’ earned retirement benefits. On Monday, he announced that his administration is “working on a plan” to create accounts for adults loosely inspired by Australia’s retirement savings system – and similar to the Trump accounts for children.
Our president and CEO Max Richtman told MarketWatch today that Trump should be working on strengthening Social Security instead of “toying around” with federally-seeded private accounts.
“We would advise President Trump to focus on Social Security – a program that has worked splendidly for more than 90 years to provide Americans with basic retirement security” – Max Richtman, President and CEO, NCPSSM
Far from fortifying Social Security for the future, these private Trump accounts are a ‘back door way’ of privatizing Social Security. First, Treasury Secretary Bessent admitted as much; then, Senator Ted Cruz affirmed the “dirty little secret” of how these accounts will lead to privatization.
The push for Trump accounts is not coming from seniors’ advocates – or even from seniors themselves. Rather, it seems to be the brainchild of Bessent and Commerce Secretary Howard Lutnick. Fox Business News reports that these two cabinet members are fleshing out the private retirement plan proposal.
Uncoincidentally, Bessent and Lutnick are entangled with Wall Street. For them, a new “retirement account” system is a chance to expand the pool of money flowing into private investment products — and shift more retirement risk from the government to individuals.
This might make billionaires and Republican donors in the financial sector happy, but for the retirees who rely on Social Security for all or most of their income, the risk is simply too great to bear. In a privatized system, one bad year in the markets could lead to a 30% benefit decrease.
The Trump children’s accounts snuck through in the Big, Ugly Bill, whose main purpose was to slash social services while showering the wealthy with new tax breaks. Under the pilot program from the 2025 megabill, the federal government seeds each children’s account with $1,000. That money is then invested in a Wall Street fund, to which parents can also contribute. It’s a handy way to funnel taxpayer dollars to the financial markets, when private-sector savings plans for children (and adults, for that matter) already exist. Much like Trump Rx, the president has co-opted an extant private sector function and branded it as his own.
Now, Trump is recycling that branding for adults by piggy-backing off of Australia’s model – apparently without understanding the Australian model in the least. The key difference is that Australia’s plan is backed by mandated employer contributions rather than federal seed money. Australia’s retirement system, called superannuation, is built on a few simple principles:
*Employers must contribute 12% of an employee’s pay into a retirement account that the worker owns.
*Contributions go into a personal, market-invested account tied to the worker, not into a government pool.
*The system is designed to supplement Australia’s public pension, not replace it.
American employers (including many GOP donors) probably would not be thrilled to pay 12% of workers’ earnings into a new, Australian-style retirement system. U.S. employers already contribute 6.2% of wages to Social Security, matching their employees’ contributions. As Max Richtman points out, “Australia’s retirement system may be fine for Australians, but we already have a proven federal retirement program that deserves the President’s attention.” So here’s an idea: why don’t we stick with Social Security, which, with some common-sense improvements, can remain the sturdy financial lifeline that it has been for more than 90 years – instead of banking on yet another Trump branding scheme?
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Watch our health policy expert Anne Montgomery’s takedown of Trump Rx HERE.
Read an article featuring our President & CEO’s thoughts HERE
Listen to our “You Earned This!” Podcast HERE