This time last year, President Obama announced a new initiative aimed at helping Americans save for retirement – My Retirement Account, more commonly known as myRA.
A year after the initial launch, we take a look at what’s happened since the announcement and myRA’s progress in its first year.
What is myRA?
MyRA is a retirement savings program targeted toward low and middle-income Americans who don’t have access to employer-sponsored plans, which, according to the Obama Administration, is half of all Americans.
The program provides starter government-guaranteed retirement accounts that follow you from job to job, charge no fees and allow you to contribute directly from your paycheck. Anyone in a household earning $191,000 a year or less can use myRA to plan for their financial future with an initial contribution of as low as $25.
Is MyRA working?
A year later, myRA is off to a slow start and it is still unclear how many Americans have signed up for myRA accounts.
In late December 2014, myRA accounts officially became available for public use, and as part of its launch, the U.S. Treasury department announced it would run a small pilot program.
While anyone who has direct deposit for their paycheck can sign up to start a myRA account, there is no active push to encourage Americans to sign up or to recruit businesses to offer their employees myRA accounts. Additionally, as the program currently stands, the only way to contribute to a myRA account is through payroll deduction.
In the coming year, the Treasury department has said it is working on creating additional ways for Americans to make contributions to myRA accounts and will begin a more robust, broad promotion of the program, according to CNN Money.
Is myRA the solution to America’s retirement crisis?
Though the myRA initiative is a step in the right direction as it encourages Americans to invest in their retirement, for most it will not be enough. The accounts have a maximum limit of $15,000 before they are required to be rolled over into a traditional IRA, proving they are not intended to be Americans’ primary retirement vehicle.
You would likely need 30 years to double your investment in myRA, signifying the importance of a diversified financial plan and one that starts early. Additionally, it is important to think about how to convert your portfolio into income that will last throughout retirement. Fixed indexed annuities can play an important role in strengthening your retirement plan by providing that vehicle of guaranteed income.