myRA

[NextExit]

Because we're too stupid to invest in an IRA.

https://finance.yahoo.com/news/lew--myra-the--stepping-stone--to-savings-121319419.html

"Safe, simple, no fees, no risk" Yea right... another version of social security.
"Designed for people who don't have access to a retirement plan at work." Really?? I don't either but that didn't stop me from getting one. Call Schwab, Vanguard, Fidelity, etc and start an IRA.
Wonder how long it will be until we're all forced to go on this "myRA" plan?

[buck1032]

What's your problem? The Gooberment knows how to handle your money better than you do. ;)

[analog_kidd]

It's genius, really. The .GOV makes it look like they are doing you a favor, when the reality of it is you are buying savings bonds and giving the drunken sailors more money to spend.

 

This program is for people who are completely clueless. They may think that they are getting a good deal, but they would be far better served opening a ROTH IRA and contributing to that. One of the pages I visited from the link above gave the example of a person putting away $5 every month and having $21,000 for retirement. Seriously? What is $21k going to do for you in 40 years?

 

If you'll recall, GW Bush wanted to allow people to put a portion of their social security contributions into an IRA type investment. It would allow people to take control of their own retirement if they wanted. They would be able to pick the investment options for that part of their retirement. Or they could continue just the way things are now and let the Gov manage it. Your choice. It was eventually put up for vote to the public during a general election, and the dumb-ass Americans voted it down. I remember there was a big push against it by a lot of politicians (presumably because it would remove that money from their reach), and the option was worded poorly and made confusing on the ballot. GW was made to be an idiot for suggesting it, but now that Obama has an idea, it's amazing. The difference is who gets to control your money.

 

I've been griping for years about all the stuff they teach you in school that you'll never use, but basic life skills are ignored. How about teaching the simple concept of compound interest, and the value of saving for retirement early? A basic money management class should be a requirement in school. I bet most high school graduates have never been shown how to balance a checkbook. By the time many people figure out they should be saving for retirement, they have missed the most important decade of their savings potential.

 

I've always thought that a cool idea would be to open an IRA for every newborn. $500 put into an IRA at age 0, if it follows the standard of doubling every 7 years if invested wisely, would grow to about $64k at retirement. That's without ever adding another penny to the account. Families could get together and donate to the fund instead of buying stupid crap the baby doesn't care about.

[10-Ring]

I get steamed every time I look at my paycheck and see how much I pay into SS.  I just think of how much money I'm loosing out on because I know that I could conservatively invest that money and get a better return on my money.

[buck1032]

 

. The .GOV makes it look like they are doing you a favor, when the reality of it is you are buying savings bonds and giving the drunken sailors more money to spend.

 

 

 

 

 

 

Easy now! I was a drunken Sailor for 20 years. I always stopped drinking and spending when I ran out of my own money. :)

[btq96r]

This program is for people who are completely clueless. They may think that they are getting a good deal, but they would be far better served opening a ROTH IRA and contributing to that. One of the pages I visited from the link above gave the example of a person putting away $5 every month and having $21,000 for retirement. Seriously? What is $21k going to do for you in 40 years?

 

The plan is designed to give people a chance to save up for a Roth IRA.  Part of the problem is banks want you to open a Roth with a decent bit, or monthly contributions.  The lump sum can be upwards of $3k, and a lot of people simply don't have that, so with the myRA, they can build up enough to meet the minimum to open one.  People working part time come to mind as immediate candidates. 

 

From the myRA site:

• Transfer or roll over your myRA to a private-sector Roth IRA at any time.
• Save up to $15,000 in your myRA before transferring to a private-sector Roth IRA.

So. this isn't a .gov retirement plan, just a bridge to get people to a real investment account for retirement planning.

 

 

If you'll recall, GW Bush wanted to allow people to put a portion of their social security contributions into an IRA type investment. It would allow people to take control of their own retirement if they wanted. They would be able to pick the investment options for that part of their retirement. Or they could continue just the way things are now and let the Gov manage it. Your choice. It was eventually put up for vote to the public during a general election, and the dumb-ass Americans voted it down. I remember there was a big push against it by a lot of politicians (presumably because it would remove that money from their reach), and the option was worded poorly and made confusing on the ballot. GW was made to be an idiot for suggesting it, but now that Obama has an idea, it's amazing. The difference is who gets to control your money.

 

If President Bush had gotten SS privatized, what happens in 2008 when the market tanks?   How about the next time, cause there is going to be a next time.

 

Also, there is the problem of the current recipients are paying for the current benefits, not paying for their own benefits down the line.  The Treasury is using  

 

 

I get steamed every time I look at my paycheck and see how much I pay into SS.  I just think of how much money I'm loosing out on because I know that I could conservatively invest that money and get a better return on my money.

 

Not for nothing, but that money was never intended for you, it's to prop up the generation retired.  I just like to think all my SS withholdings are what pays my fathers monthly benefits, which is just all the money he wasted on me growing up coming full circle.

Edited November 10, 2015 by btq96r

[NextExit]

Is there something wrong with opening a savings account at a bank? I don't need myRA to put money aside. I can put in any amount whenever I want. Lets say I save up $3k and I'm ready to buy a mutual fund but then I find out my heat pump died. I'll put the fund purchase on hold & use my $ to buy a heat pump. If the $3k is in the myRA acct, I can't touch it. Also, as pathetic as interest rates are, my savings acct will accrue interest. I didn't see anything about an interest bearing myRA.

[analog_kidd]

 

If President Bush had gotten SS privatized, what happens in 2008 when the market tanks?   How about the next time, cause there is going to be a next time.

 

Like I said, it would have been voluntary. Not good with money? Stay in the current plan. Good with it? Take the self directed approach. The fact of the matter regarding the markets is they go up and down. Sometimes way down, but they have always come back up. I took a huge hit in 2008, but I made it all back and a lot more. 

 

SS tax is 6.2% of your gross. If a person making $50k put in that 6.2% for their entire career into an IRA, they would have almost $1,000,000 (MIllion) dollars saved in their fund. Then, just earning 5% of that on the investment during retirement pays out $50,000 a year, without even touching the nest egg. I got my SS statement a few months ago. they say I'll get about $1200 a month if I don't collect till age 65. By my math that's only $14,000 per year compared to my $50k. Heck, even if I only did half as good as I think I can, I still come out way better. And with my way, I get to pass on a huge chunk of cash to my kids, who can invest it yet again and enjoy an early retirement and pass some more on to their kids. It becomes self sustaining after a while as long as it is managed well.

 

SS was intended as a savings plan initially. The only reason your current contribution pays current retirees is that Congress dipped into the kitty when they shouldn't have and spent the balance. Now they have dug themselves into a hole and we have to pay their mistake.

 

So, I don't really care that Congress screwed up. It's my money and I can do better with it than they can. I'm concerned about me and my family. 

Edited November 10, 2015 by analog_kidd

[btq96r]

Is there something wrong with opening a savings account at a bank? I don't need myRA to put money aside. I can put in any amount whenever I want. Lets say I save up $3k and I'm ready to buy a mutual fund but then I find out my heat pump died. I'll put the fund purchase on hold & use my $ to buy a heat pump. If the $3k is in the myRA acct, I can't touch it. Also, as pathetic as interest rates are, my savings acct will accrue interest. I didn't see anything about an interest bearing myRA.

 

There's nothing wrong with opening a savings account.  If you want to do it.  That interest is minuscule.  You might be able to buy a snickers bar every month. The myAPR would have gotten you 2% if it had been around in 2014 since it's run through the government securities fund. 

 

This isn't being forced on anyone, just being given as an option.  You can even pull out whatever you put into the myRA, but the interest accrued is subjected to taxes if it isn't transferred into a RothIRA.  Just like a regular investment account, or interest on a savings account at the end of the year.

 

 

 

 

Like I said, it would have been voluntary. Not good with money? Stay in the current plan. Good with it? Take the self directed approach. The fact of the matter regarding the markets is they go up and down. Sometimes way down, but they have always come back up. I took a huge hit in 2008, but I made it all back and a lot more. 

 

SS tax is 6.2% of your gross. If a person making $50k put in that 6.2% for their entire career into an IRA, they would have almost $1,000,000 (MIllion) dollars saved in their fund. Then, just earning 5% of that on the investment during retirement pays out $50,000 a year, without even touching the nest egg. I got my SS statement a few months ago. they say I'll get about $1200 a month if I don't collect till age 65. By my math that's only $14,000 per year compared to my $50k. Heck, even if I only did half as good as I think I can, I still come out way better. And with my way, I get to pass on a huge chunk of cash to my kids, who can invest it yet again and enjoy an early retirement and pass some more on to their kids. It becomes self sustaining after a while as long as it is managed well.

 

SS was intended as a savings plan initially. The only reason your current contribution pays current retirees is that Congress dipped into the kitty when they shouldn't have and spent the balance. Now they have dug themselves into a hole and we have to pay their mistake.

 

So, I don't really care that Congress screwed up. It's my money and I can do better with it than they can. I'm concerned about me and my family. 

 

 

I'm not disagreeing with you, I'm just dealing with things as they are now.  Unless you think there is a politically feasible way to get back to what was, or eliminate social security...kinda doubt it, though.

[monkeylizard]

btq69r is right. The myRA fits a hole for people who want to start saving for retirement in one of those nice tax-incentivized instruments like an IRA or RothIRA but can't because they don't have the $2-3K minimum investment required. It works just like an IRA in that all of the money you put in it is put in after taxes so it's your money. You can take it out at any time without any penalty. So if your heat pump fails, you're good to go. The interest earned must remain in the myRA or incur a penalty. Once it's large enough to buy into an IRA or RothIRA, you roll it over. Note that just like converting an IRA to a Roth IRA, there will be a tax bill for converting a myRA to a Roth IRA. the only real difference between it and an IRA is that you don't get to pick any stocks/bonds/funds. It just gets the same low interest rate as the Government Securities Fund.

 

All that said, I don't see the point for anyone to bother with this. The interest earned and the tax factor on such a minuscule amount of money is as close to zero as you can get without it actually being zero. This really doesn't do much more than a regular FDIC insured savings account, from a purely financial/mathematical perspective. From the human behavior perspective, yeah I can see people being more diligent about keeping their hands off it to let it grow because they'll see it as a real retirement account and not just a savings account. Accessing the money is a little harder too as it's not quite as simple as going to the bank and getting it like it is with a savings account. As opposed to a savings account, the myRA makes a low earner's taxes a little harder to file and gives them less access to their money in an emergency.

 

I guess my final analysis is that it's a government program that's going to cost us way too much money to operate for what little benefit we gain. The .gov could probably get just as good if not better results by spending a fraction of that operational budget on educational programs to the poor and lower middle-class about how and why to get a savings account setup and set aside for building enough money to get into an IRA or RothIRA.

Edited November 11, 2015 by monkeylizard