Will the ‘myRA’ retirement plan take off?
January 28, 2014, 9:52 PM
By Matthew Heimer
In his State of the Union address tonight, President Obama announced that he would introduce a
new kind of retirement-savings plan for
workers who don’t have access to such plans through their jobs. “While
the stock market has doubled over the last five years, that doesn’t help
folks who don’t have 401(k)s,” the president said. But how much of an
impact will his proposal have for middle- and lower-income savers?
The plan, which Obama dubbed the “myRA” (rhymes with the initials
“IRA”), is designed to create “starter accounts” that would help novice
investors avoid some common pitfalls of retirement savings. In briefing
materials accompanying the State of the Union address, the
administration noted that many private-sector providers don’t allow
“smaller balance savers” to open accounts; providers who do allow such
accounts often charge fees that can eat up a proportionately high
percentage of their balances.
In his address, Obama described the myRA as “a new savings bond” that
“guarantees a decent return with no risk of losing what you put in.”
That wording brings to mind
efforts by the Treasury Department to create “R bonds,”
a special kind of interest-paying Treasury bond aimed at retirement
savers; details of how such a bond would work haven’t been released yet.
In
The Wall Street Journal this evening,
Damian Paletta and Anne Tergesen report that the administration
“is expected to encourage employers to offer the investment vehicles to
employees who would be automatically enrolled unless they specifically
elected not to participate.”
Read More Here
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Obama Introduces MyRA: The "No Risk, Guaranteed Return" Retirement Savings Bond
Submitted by Tyler Durden on 01/28/2014 22:32 -0500
Earlier today we hinted at what was coming in "
Obama To Unveil Treasury IRAs." Well, here it is, and it even has a catchy name. Presenting:
the MyRA, and since it offers "
guaranteed return and no risk" we now know where all the Fed's bond trades will go to work once QE ends.
From the president:
Let’s do more to help Americans save for retirement.
Today, most workers don’t have a pension.
A Social Security check often isn’t enough on its own. And while the
stock market has doubled over the last five years, that doesn’t help
folks who don’t have 401ks. That’s why, tomorrow,
I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA.
It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing whatyou put in ........
Read More Here
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Can Obama's 'MyRA' Lure Workers Who Don't Save for Retirement?
President
Obama picked a good venue to boost the “MyRA” retirement savings
accounts he touted in last night’s State of the Union address. He spoke
at a U.S. Steel plant in Pennsylvania, a state where the public pension
system has a
$47 billion shortfall and where workers would be right to worry about running out of money as they age.
Defined-benefit plans are disappearing—they covered 35 percent of Americans in the early 1990s and
only 18 percent
in 2011—and defined-contribution plans such as IRAs and 401(k)s haven’t
made up the difference. Too few American workers have such accounts,
and most of the ones who do don’t save enough. A survey last year by the
Employee Benefits Research Institute found that only 13 percent of
respondents are “very confident” they will be able to live comfortably
in retirement.
That dismal picture helps explain the intense
interest in MyRA since Obama introduced the idea last night. “It’s a new
savings bond that encourages folks to build a nest egg,” Obama said.
“MyRA guarantees a decent return with no risk of losing what you put
in.” Administration officials
fleshed out a few of the details for reporters:
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