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The trouble with Obama’s myRA plan: Retirement plan helps those with no 401(k), but not much
MarketWatch ^ | 02/02/2014 | Chuck Jaffe

Posted on 02/02/2014 11:54:41 AM PST by SeekAndFind

Real life isn’t always a “Field of Dreams,” where “if you build it, they will come.”

Instead, there are times when you build it, and they go “Ho-hum,” and mostly ignore you.

So while any effort to encourage increased retirement savings among workers deserves to be applauded — arguing against increased savings is like disputing the value of parenthood and apple pie — it’s hard to see President Obama’s myRA program achieving most of its goals, because once you get past what he described during the State of the Union address, it appears to be a lot of wishful thinking.

Let’s do the digging and see why that is.

The awkwardly named myRA (rhymes with IRA, as in the individual retirement account it is designed to supplement) was unveiled by President Obama this week as a savings vehicle designed to serve people whose employers don’t provide access to a retirement plan. That’s about half of all workers, mostly the ones who work for small employers that can’t afford to offer a plan.

The basic details released to this point make it clear that myRAs will be backed by a security that looks and feels like a savings bond, backed by the government and with the same variable-interest-rate return offered by the G Fund, the Government Securities Investment Fund in the federal employees’ Thrift Savings Plan. (It’s similar to another idea the Treasury has been working on for at least four years now: the R-bond, a retirement product that would let employees direct part of their paycheck toward an investment.)

Savers would be guaranteed that the value of their account would never go down; they would pay no fees on the accounts.

(Excerpt) Read more at ...

TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: 401k; ira; myra; obama; retirement

1 posted on 02/02/2014 11:54:42 AM PST by SeekAndFind
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To: SeekAndFind

who the hell is so crazy as to put their money into something that isn’t even passed by Congress as a legal account (with defined properties and rules/protections)?

All for show, all for show.

2 posted on 02/02/2014 11:56:57 AM PST by faithhopecharity (C?)
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To: SeekAndFind


The idea being promoted with this plan is that people can elect to start out with a small amount of money and have contributions as low as $5 deducted from their paychecks. This is all in the name of the poor, because they often don’t have enough money to contribute to retirement plans.

I think a cynic could criticize this whole plan from a lot of different angles. Ironically, I was working on an article about the possibility of 401(k) confiscations in the future, and this proposal by Obama could be seen as a subtle first step towards the government getting its hands on retirement accounts.

It starts out as voluntary... and eventually will be pushed as a mandate.

While eventual 401(k) confiscations could be part of the agenda of MyRA, I think there is a bigger reason for Obama to push this plan. It’s actually a short-term solution for Obama to partially fund the deficit, as well as a longer-term plan to kick the can further down the road.

Obama’s plan says the funds would be backed by the U.S. government. He claims these will be no-risk investments. But if they are investments, somebody has to bear the risk...

The way I see it, the government is trying to get millions of people to hand over their money to buy government debt. Once this is achieved through MyRA, it wouldn’t surprise me if it were offered to all 401(k) holders.

Again, it will start out voluntary, but perhaps it will eventually be pushed as mandatory. And it will become easier to push if there is some kind of a major stock market correction.

Obama’s speech happened to occur the night before the Federal Reserve announced a continuation of its tapering — which is nothing more than a reduction in its rate of monetary inflation. So while the Fed continues to create money out of thin air, it is doing less of it.

This means the Fed will not be buying up as much government debt. And this means the deficit will have to be funded more by foreign central banks or investors.

Some of the politicians in Washington, D.C. are starting to see the writing on the wall. They realize the Fed can’t support them forever — or at least not to the same extent it has been. The government does not want to cut spending and is therefore trying to come up with other ways to raise money.

While this new MyRA plan will not add up to a lot at the beginning — particularly if it really is just low-income people who start out — it will eventually add up to many billions of dollars in just a few years. And if the government can get the average 401(k) investor to start buying this “guaranteed” fund down the road, then it could be looking at hundreds of billions of dollars.


3 posted on 02/02/2014 11:57:58 AM PST by SeekAndFind
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To: SeekAndFind

It’s kinda like a semi-secure mattress.

4 posted on 02/02/2014 11:58:41 AM PST by cuban leaf
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To: SeekAndFind

Nothing more than a savings account with payroll deduction.

Join a Credit Union.

Better interest, more convenient and not run by terrorist sympathizers.

5 posted on 02/02/2014 12:01:31 PM PST by Iron Munro ("Sooner or later everyone sits down to a banquet of consequences." - Robert Louis Stevenson)
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To: SeekAndFind


6 posted on 02/02/2014 12:03:50 PM PST by gattaca (The heart of the wise inclines to the right, but the heart of the fool to the left. Ecclesiastes10:2)
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To: SeekAndFind

I’m not sure how anyone is going to actually make money on something like a G Fund for poor people. Inflation (woefully under reported by the government in my opinion) would eat up the purchasing power of their savings.

Government taxes our income. A responsible person sets some of what’s left aside for a rainy day, but the government’s profligate spending inflates away the value of our nest eggs, too. It’s practically criminal, but what can we do?

7 posted on 02/02/2014 12:12:01 PM PST by CitizenUSA (Sodomy and abortion: the only constitutional rights cherished by Democrats.)
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To: SeekAndFind

Sure, give the government your money because it’s insured by the faith and credit of the US Government. Faith and credit of the US Government - that doesn’t exist any more. At this point, keep your money, don’t give it away to a bank or the government.

8 posted on 02/02/2014 12:18:29 PM PST by Marcella ((Prepping can save your life today. I am a Christian, not a Muslim.))
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To: SeekAndFind

It's your money, safely invested in a lockbox (full of My-OU's)

9 posted on 02/02/2014 12:18:38 PM PST by ZOOKER (Until further notice the /s is implied...)
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To: Iron Munro
No, I don't think it's a savings account. It's a pension, as the plan is to convert it to an annuity when you retire.

Once retired, you won't be able to pass this on to your kids and grandkids once you retire, as you can with a savings account.

10 posted on 02/02/2014 12:20:09 PM PST by slowhandluke (It's hard to be cynical enough in this age.)
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To: SeekAndFind

Why not just bring back the old savings bond with a 7 year maturity?

This was a good vehicle to learn how to save, while at the same time having something you can hold in your hand.

they were inexpensive to buy.....

11 posted on 02/02/2014 12:23:07 PM PST by joe fonebone (a socialist is just a juvenile communist)
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To: slowhandluke
Once retired, you won't be able to pass this on to your kids and grandkids, as you can with a savings account.

Good point.

Another factor in favor of a plain old savings account.

12 posted on 02/02/2014 12:42:46 PM PST by Iron Munro ("Sooner or later everyone sits down to a banquet of consequences." - Robert Louis Stevenson)
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13 posted on 02/02/2014 12:44:32 PM PST by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: SeekAndFind

I can guarantee you that this “myra” will be just one more scheme to defraud honest, law-abiding hard-working individuals and give money to lazy democrat voters.

14 posted on 02/02/2014 1:22:45 PM PST by I want the USA back (Media: completely irresponsible traitors. Complicit in the destruction of our country.)
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To: I want the USA back

I say go for it. Only those dumb enough to participate will.

15 posted on 02/02/2014 1:58:02 PM PST by DIRTYSECRET (urope. Why do they put up with this.)
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To: SeekAndFind

Social security was supposed to be for retirement, but the government spent it just like they are spending the deductions for medicare that are taken out of your paychecks. Now medicare is practically worthless and seniors must have some type of secondary insurance to pay for the rest.

“My RA” is just another tax. You’ll never see your money again. Our government has become an addict.....that is constantly trying to manipulate more money out of people’s hard-earned paychecks and who then commences to piss it all away on debacles like Obamacare and CoverOregon.

Obama can take “MyRA” and shove it up his bunghole.

16 posted on 02/02/2014 2:15:22 PM PST by doc maverick
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To: I want the USA back

How long before they use means testing.

If you make too little to contribute, then they take some of our tax money and fund it for them.

Something like the earned income tax credit.

It’s only fair.../s

17 posted on 02/02/2014 2:20:58 PM PST by crusher2013
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On first blush, the whole myRA scheme looks like Obama pretending to do something, albeit very small. The downside will mostly be wasted cost for maladministration by regime cronies.

Unfortunately, whenever the gubmint starts a program, it attains eternal life. Once established and shown to be a comprehensive failure, the next step will be a new entitlement, wherein others (i.e., taxpayers or employers) will be required to fund the accounts. Then to allow “fairer access to capital”, myRA account holders will be allowed to “borrow” against their future savings. When they get to retirement age and have already spent far more than they saved, that will be an unfair result — possibly with racial disparities — so the public will have to “replace” the money the account-holders took out.

This is all semi-satirical, but especially with Elizabeth Warren casting about for a financial mission for the Post Office, I say kill it before it grows.

18 posted on 02/02/2014 2:35:29 PM PST by Chewbarkah
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To: SeekAndFind


19 posted on 02/02/2014 5:14:34 PM PST by SunTzuWu
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