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.
President Obama, State of the Union Address, January 28, 2014
In this installment of Investing 101, we take a deeper look into one of President Obama’s initiatives introduced at this year’s State of the Union Address, titled MyRA. Concerned that many workers across the country are not offered retirement savings plans through their employer, the White House hopes to encourage saving through the use of very low risk, modestly sized amounts to get the ball rolling.
“It’s best to think of MyRA as training wheels for savers,” says Chip Castille, Head of the Retirement Group at Blackrock. “This is a program really designed for people who don’t participate in any kind of retirement savings program right now.”
MyRA utilized an asset called an “R Bond,” which Castille says “pays above money market yields with no potential loss of principal.” In addition to relative safety the plans use after tax money, meaning individuals can take cash out whenever it is needed without a penalty.
The MyRA Basics:
- Need $25 to open an account
- Account provided at your workplace
- Utilizes an asset called an ‘R Bond’
You can see the full “Breakout” segment below: