The Australian pension system is funded through mandatory contributions into private retirement accounts During the COVID pandemic, the government allowed people to pull up to $20,000 from those accounts decades early What happened? Firstly, uneducated people pulled the most:

Australia did this because they needed fiscal stimulus. If they didn't allow people to make early withdrawals from their accounts—which normally remain inaccessible until retirement age—, they would have ended up in a very bad position. But people did withdraw.

About a quarter of those aged >34 withdrew. The most common amount to take out was $10,000 each time the possibility became available. All said and done, that typically meant pulling down 51% of the total balance. That also meant foregoing $120,000 on average by retirement!

These withdrawals were disproportionately done by... - Lower earners (-8%) - People with smaller savings (-75%, with -60% lower investment rates) - Males - Those on welfare - Rural Australians

One result of this is that regional differences in savings were greatly magnified. Places with more Aboriginals saw larger withdrawals. For example, while only 3% of those in Acton withdrew, 55% of those in Northern Peninsula did.

What people spent that withdrawn money on was... predictable? Given that they're cutting down retirement accounts considerably, and that the demographics of withdrawals were irresponsible, it's not surprising that the largest clear-cut spending category was... Gambling.

These withdrawals stimulated the economy, but they ended up being a massive transfer from non-savers to savers What I take from this is that it's likely that, without mandatory savings, nudges, and so on, we are essentially unable to get dangerously many people to save to retire

When people have the opportunity, they just love to spend! Look at Americans' retirement accounts for comparison. By retirement, you should be a millionaire who can sustain yourself. And yet, 43% of those aged 55-64 put $0 in retirement accounts.

This is just something we have to live with. I like the Australian system as a way to manage this. By taking 10.5% mandatory contributions to their own private accounts that people can't touch until old age, you can force people to save. Maybe sustainably, too!

Source: