SOTU Follow-Up: What's a MyRA?

Friday, January 31, 2014

piggy banks (flickr user voobie)

In his State of the Union speech, President Obama proposed a new retirement savings plan called MyRA. Richard Rubin, Bloomberg News reporter, explains how myRAs work (. . .and how they're pronounced).

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 what you put in. And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans. Offer every American access to an automatic IRA on the job, so they can save at work just like everyone in this chamber can. And since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans.

-- President Obama from the 2014 State of the Union speech.


Richard Rubin

Comments [10]

Mr. Bad from NYC

@ Tiarella

First of all $1000.00 is the minimum to open a ROTH @ Vanguard. If you open a ROTH with someone else you deserve what you get (death by fees). You really think that someone who cannot save $1000.00 owing to lack of discipline or penury should be investing in ANY IRA? You must be joking or shilling for Somebody living paycheck to paycheck should not be sending their beer money to an IRA, it's stupid and counterproductive because they will inevitably have to withdraw the tiny bit of cash for some reason and end up double taxed by the IRS early withdrawal penalty which applies to BOTH the principal and any piddling interest that may have accrued.

Jan. 31 2014 11:45 AM

Anything that gets people in the habit of saving regularly seems like a good idea. This is not for those who have the $3000 minimum needed to open an IRA in Vanguard or Fidelity or other investment group. The MyRA appears to be similar to the Thrift Plan G-Fund option available to government employees which guarantees the principal amount invested. That would appeal to those who are afraid to invest because they can't afford to lose their investment. Although there is no choice of funds in which to invest….it is probably that feature which keeps the administrative cost low and the program simple for those who do not understand the complexities of investing. Possibly the investment choices would be expanded in the future as they were with the Thrift Plan.

Jan. 31 2014 11:33 AM
Mr. Bad from NYC

@ the financially brain dead

If you are a simp with a job and no IRA and no idea 'bout investing let me make it real easy for you:

1.) Open a ROTH IRA @ Vanguard (the low cost/fee industry leader)
2.) Buy a vanguard target date retirement fund
3.) Set dividends to reinvest
4.) Contribute regularly to account and buy more fund shares
5.) If the world doesn't blow up you will have done the best you can to plan for retirement.

Jan. 31 2014 11:13 AM
Wallace Little from Manhattan

Yes. An investment in Treasury securities guarantees you against loss of principal, but only if you hold until maturity. If interest rates rise while you own the bond, and you have an emergency, requiring you pull to out cash, the value will be less than you invested???? Obama could get caught in another communication error, if I'm correct. Your guest is no longer there, but your show should research this.

Jan. 31 2014 11:11 AM
Mr. Bad from NYC


Why would you want one? Just buy a bond fund in your IRA.

Jan. 31 2014 11:08 AM

I already have an IRA (I've never had a job with a 401k). Can I also get a MyRA?

Jan. 31 2014 11:03 AM
Jersey Girl from Red Bank, NJ

I thought the reason that the investment is only open to Gov't bonds is so that the principle can be guaranteed. The Gov't couldn't guarantee open investing.

Jan. 31 2014 11:03 AM
Jennifer from NYC

Pensions, not defined contribution plans, are the only way to provide a reliable nest-egg for retirement.

Jan. 31 2014 11:00 AM
Chris from NYC

A MyRA is another way for the government to issue debt. PERIOD.

Why someone would want to buy a security that pays ~2% interest while the real inflation rate is higher than that makes no sense to me.

Jan. 31 2014 10:55 AM
Mr. Bad from NYC

I'm not saying there is some sort of conspiracy but there is really nothing about this proposal that makes any sense unless it's a prelude to shifting SSI into these accounts and eliminating SSI as we know it. Otherwise it's nothing but a worthless PR stunt.

Jan. 31 2014 10:55 AM

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