What do you think of the MyRA?

[Eagle]

What do you think of the MyRA? Read this the other day:

In his State of the Union Address in January 2014, President Barack Obama unveiled what he hopes will be a solution to the retirement program. A retirement account called the MyRA is aimed at those who don’t have employer-sponsored retirement accounts, but it will also be available to those with employer plans. The MyRA retirement savings plan is also designed to encourage saving due to its low barrier to entry.

source

[Petunia 100]

What do you think of the MyRA? Read this the other day:

I think if this is what it takes to get someone started saving, then OK, let's do it. The payroll deduction is really the only thing "new" here. You can already open a Roth IRA at a bank and put your money in cash, if that is what you want to do. Online banks such as Capital One 360, Ally, etc., have no minimums.

[Eagle]

Someone pointed me to this source. Here's what I found:

Seems like anyone can invest as long as their household income falls below $191,000 a year.

It's interesting that MyRA allows savers to invest after-tax dollars and withdraw the money in retirement tax-free. The account will only invest in government savings bonds. So it will be a low-yield investment like the Thrift Savings Plan's Government Securities Investment Fund (TSPGSIF) say making 3.6% that occurred from 2003 to 2012. Doesn't that barely keep up with inflation?

There's taxes and possibly a penalty if you withdraw before 59 1/2. Backed by the U.S. government so savers never loose their principle investment. Unless of course the government goes bankrupt... No investment is 100% guaranteed.

People can invest innitially as low as $25 and monthly as low as $5 a month... with maximum contributions of up to $5,500. Once the balance hits $15000 or after 30 years it is rolled over to a private sector Roth IRA. Unlike a Roth IRA the MyRA is soemthing employers can offer directly to employees. Interesting.

It seems like a limited version of existing Roth IRA plans already in place. And you can't do both a MyRA and Roth IRA from what I understand. A step in the right direction it looks like as it gets pople saving. But it still needs work. Perhaps this is a way that the President found to get around Congress's inaction?

[Weird Tolkienish Figure]

What do you think of the MyRA? Read this the other day:

Dare I say it's one of Obama's better proposals.

[bjl584]

If it gets people saving then, ok. Good. But, if you are earning a small income and live paycheck to paycheck, then you aren't going to have any money to save. Saving and living frugally is a mindset. It's behavioral.

I'd think that they aren't a lot of people out there that were sitting around waiting for a government program to be created so that they could start saving more. If they were able to save, then they probably would have been all along, government program or not.

[Eagle]

Dare I say it's one of Obama's better proposals.

Lol. Not sure what that says about his other proposals then?

[Eagle]

If it gets people saving then, ok. Good. But, if you are earning a small income and live paycheck to paycheck, then you aren't going to have any money to save. Saving and living frugally is a mindset. It's behavioral.

I'd think that they aren't a lot of people out there that were sitting around waiting for a government program to be created so that they could start saving more. If they were able to save, then they probably would have been all along, government program or not.

I agree saving and living frugally is a mindset. It's a pattern or habit people develope.

I also agree that people who are struggling probably don't have the mindset of saving $25 or even $5 a paycheck. Typcially, people who struggle go from one emergency to the next never catching up.

[Petunia 100]

It seems like a limited version of existing Roth IRA plans already in place. And you can't do both a MyRA and Roth IRA from what I understand. A step in the right direction it looks like as it gets pople saving. But it still needs work. Perhaps this is a way that the President found to get around Congress's inaction?

Congress' inaction about what? Will you explain your view a bit more? Thanks.

[Eagle]

Congress' inaction about what? Will you explain your view a bit more? Thanks.

It is my opinion that all branches of government have been pretty inneficient in the U.S. in the last 50 or even 100 years. Congress, on both the left and the right, in particular has a lot of wealthy people that are more interested in the special interest groups along with keeping their jobs than really making any significant changes. Americans don't really save like they should and are in debt up to their ears (or drowning in it some might say). This attempt by President Obama is like putting a bandaid on a water dam. But at least it's something I guess. Not sure if that clarifies my position or not? Lol

[Eagle]

Americans don't really save like they should and are in debt up to their ears (or drowning in it some might say).

Re: Debt which keeps people from saving and building wealth...

From this source as of March 2014...

U.S. household consumer debt profile:
• Average credit card debt: $15,252
• Average mortgage debt: $152,209
• Average student loan debt: $32,986

[kv968]

People can invest innitially as low as $25 and monthly as low as $5 a month... with maximum contributions of up to $5,500. Once the balance hits $15000 or after 30 years it is rolled over to a private sector Roth IRA. Unlike a Roth IRA the MyRA is soemthing employers can offer directly to employees. Interesting.

This is where I think program could use a little tweaking. $15k or 30 years and then it rolls over to a private Roth?!?

It should be pointed out to people that once they have $1000 in their MyRA they can roll it over to a private Roth (i.e. Vanguard, T Rowe, etc...) and invest in at least their target date funds (in the case of Vanguard) with no penalty if they sign up for online delivery of statements. That would at least allow them to make more of a return than they would with the "G" Fund they would be in under the MyRA. And they would be able to add to it every time their MyRA account reached $100 since that's usually the minimum amount needed to add to those accounts.

Granted if you were to just open a MyRa with $25 and add only $25/month it would take you 3.25 years to reach that $1000 minimum but its better than letting it sit there for another $14k or 26.75 years for it roll over automatically.