We’re Cautiously Optimistic about MyRA

President Obama's MyRA Account.

President Obama’s MyRA Account.

In last night’s State of the Union Address, President Obama announced his MyRA account that will allow workers who aren’t offered an employer-sponsored retirement plan to invest up to $15,000 in government bonds for a “decent return with low risk”.  Once the account reaches $15,000, it will need to be rolled over into a private-sector Roth IRA.  

Half of all workers don’t have access to an employer-sponsored retirement plan.  We support giving people options and we support anything that motivates more people to save more for retirement.  A 2013 Employee Benefit Research Institute study showed that:  

More than half of workers said they had less than $25,000 in savings, outside of their home and pensions. And 28% of workers said they had less than $1,000 in savings.

Mr. Obama will speak more about the MyRA account in the coming days, starting today in my home state of Pennsylvania.  More details will come out in his coming speeches.  

What’s not clear to us now is why someone would choose the MyRA account that can only be invested in government bonds over a private-sector Roth IRA account that can invest in most anything, including government bonds.  Anyone over their state’s age-of-majority and working can open a private-sector Roth IRA at a credit union, bank or discount broker and set up direct deposit to have a portion of their pay deposited into their account each pay day.  

Often times, private-sector accounts can be opened for as little as $0 – $25 and the direct deposit into the account can be for as little as an employer allows.  Most financial services firms offer an Automatic Investment Program or AIP that allows investors to regularly contribute a specified dollar amount into a mutual fund.  Firms are currently working to offer AIP for Exchange Traded Funds (ETFs).  

We support anything that gets more people investing more.  We’re just curious if this is the best means to doing so.  If nothing else, at least people are talking about this today.

We’ll stay tuned.  More to come. 

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