What America Can Learn About Retirement From Australia

As the baby boomers begin entering their golden years, the United States is bracing for a retirement crisis that could change the system entirely. Longer life expectancy, rising costs of living, soaring health care expenses and an unstable public safety net could mean the next few generations are in for a bumpy ride when it comes to retirement.
In fact, about half of the country doesn’t have the savings to be able to maintain their current standard of living after retirement, Marketwatch reports. The Boston College Center for Retirement Research’s “National Retirement Risk Index,” which measures the portion of the population that can expect to be financially comfortable in retirement, found that number jumps to 60 percent among low-income workers, but hangs at 40 percent among higher-paid workers — painting a pretty bleak picture for Americans.
On the other side of the world, however, Australia has found a solution to ensuring a stable retirement for its citizens — and Americans should pay attention. Currently, more than 90 percent of employed Australians save for their golden years, representing an estimated $1.6 trillion in savings for the nation’s economy as of June 2013, the consulting firm Deloitte found.
But it wasn’t an overnight change of behavior for the Aussies. In fact, Australians shared the American sentiment about retirement until 1992, when the government created a mandatory savings program that required employers to contribute 9 percent of an employee’s salary to a retirement account for workers between 18 and 70.

“Only a few people received good retirement programs — people who worked for companies or the public sector,” said Jeremy Duffield, chairman of the Australian Centre for Financial Studies, an academic think tank. “Large groups of the population had no coverage at all.”

The “Superannuation Guarantee” program enables employees to pick which fund they want to invest their cash in, similar to a mutual fund or a public-sector group, the National Journal reports. The three-pronged system also relies on voluntary savings, which only around 20 percent of people take advantage of, and a means-tested government pension program similar to the U.S. Social Security system. Susan Thorp, the chair of finance and superannuation at the University of Technology in Sydney, estimates about 75 percent of Australian senior citizens take advantage of at least a partial means-tested pension.

In recent years, the Australian government has amended the program, with a schedule increase of the employer contribution, upping it to 12 percent by 2020, while eligibility for a means-tested pension will rise from age 65 to 67 over the next decade.

But Thorp estimates Australians between age 60 and 65 have around $170,000 in Aussie dollars saved in these compulsory accounts. Americans could stand to benefit from a model with a mandatory component like the Superannuation Guarantee, as only about half of U.S. workers receive retirement coverage through employers or institutions.

The Australian program also includes stringent rules about withdrawing money from the superannuation, which subsequently leads to a comfortable nest egg as residents head toward retirement. Meanwhile, the United States 401(k) model allows Americans to break into the account prematurely to pay off loans or in the wake of unemployment.

But much like our 401(k), the superannuation program comes with financial responsibility and individual choice. And that’s one area that Australia could stand to improve. Duffield points to a low financial literacy rate among Australians, who may not be paying attention to how their money is invested and the fees that apply.

But financial literacy aside, one of the biggest challenges in implementing the system is political will, which could pose a problem with gridlock and partisan attitudes gripping Congress. But it’s something that politicians need to look at seriously, as more Americans begin to retire. After all, as Australia has demonstrated over the last 22 years, committing to a plan can pave the way for a better future — one that’s more golden than the current outlook here in the United States.

MORE: 1 in 4 Can’t Retire Through Their Employer in Connecticut. Now the State Is Changing That.

Could More Education Increase the Number of Organ Donations in America?

Each year, about 400,000 Americans with kidney disorders undergo regular dialysis — a costly and time-consuming procedure — to remain alive.
Ideally, these people would receive kidney transplants so they wouldn’t have to spend hours each week tethered to a dialysis machine, but the demand for donated organs in the United States far outweighs the supply. (According to the PBS NewsHour, the wait for a kidney in America averages three to five years.)
Why, you might ask? In part, because many Americans just aren’t aware of how important it is to register as a potential organ donor. Add that to the fact that the topic of organ donation makes some people squeamish and unwilling to discuss it with loved ones.
But a series of new programs in Australia might provide a model for how to promote organ donation in the United States. Australia’s recent interventions have increased the rate of donation to the highest it’s been in 25 years. What’s the secret from Down Under?
Yael Cass, the CEO of the Organ and Tissue Authority told Sara James of the PBS NewsHour, “The key thing that we’ve done is that we’ve picked best practice from around the globe.”
Those include raising public awareness of the problem through media campaigns and offering paid leave from work from living donors. Additionally, the Australian government reimburses employers for the time donors take off to recuperate.
Australia also trained 600 health professionals in important techniques related to organ donation — such as how to broach the topic of donation with grieving families. They also created a kidney donation database that registers and compares the stats of the chronically ill waiting for kidneys with those of potential donors.
These efforts have increased the rates of donation in Australia by 60 percent over the last four years, Cass said.
The policies made the difference in Rosemary Wehbe deciding to become a donor for her brother. She didn’t want to lose income from her work as a photography teacher in Sydney, but because of the reimbursement program, she didn’t have to worry about that. Her brother, Simon, told James, “What is it like to feel like someone saved your life? I owe her my life, really.”
Let’s hope that the U.S. considers adopting some of these pro-donation policies and that more lives are saved as a result.
 
MORE: The Opera Singer’s Third Set of Lungs