Skip to comments.MyRAs Are the Wrong Way of Helping Ordinary People Save Money
Posted on 02/03/2014 5:55:59 AM PST by Kaslin
As part of his State-of-the-Union speech, President Obama announced he was going to unilaterally create a new retirement savings account that supposedly would be available to all workers.
Employers would be mandated to facilitate these MyRA accounts, and the money collected would be invested in guaranteed government bonds.
There are some good features to the MyRA plan, most notably the fact that money in the accounts would be protected from double taxation. Workers would put after-tax money in the accounts, but there would be no additional layers of tax on any earnings, or when the money is withdrawn.
In other words, a MyRA would be akin to a back-ended (or Roth) IRA.
But there are some bad features, including the fact that taxpayers would be subsidizing the earnings, or interest, paid to account holders (though this would be a relatively benign form of government spending, at least compared to Obamacare, ethanol, etc, etc).
My biggest complaints, though, are the sins of omission, which I discuss in this interview for Blaze TV.
Dan Mitchell Discussing President Obama's New MyRA Proposal
Simply stated, if Obama was concerned about low returns for savers, he should be directing his ire at the Federal Reserve, which has artificially pushed interest rates to very low levels as part of its easy-money policy.
But more importantly, MyRAs will be very inadequate for most workers with modest incomes. If the President really wanted to help ordinary people save for retirement, he would follow the successful example of more than 30 other nations and allow workers to shift their payroll taxes into personal retirement accounts.
This video explains why reform is so desirable.
Saving Social Security with Personal Retirement Accounts
Critics say it would be very expensive to make a transition to this modern system, and theyre right. If we let younger workers put their payroll taxes in a personal accounts, well have to come up with a new source of revenue to finance benefits being paid to current retirees and older workers.
And were talking lots of money, as much as $7 trillion over the next few decades.
But thats a lot less than the $36 trillion cash shortfall that well have to somehow deal with if we maintain the current system.
In other words, were in a very deep hole. But if we shift to personal retirement accounts, the hole wont be nearly as large.
P.S. The video mentions that Chile and Australia deserve special attention. Click here if you want to learn about Chiles successful system and click here if you want to see how Australias superannuation system has been a big winner.
P.P.S. Some people already have asked me whether I was too Pollyannish in saying that theres no risk for several decades that Washington will default. I could be wrong, of course, and I have shared BIS, OECD, and IMF data that reveals the United States has gigantic long-run fiscal challenges. But as I said in the interview, I think most other welfare states will collapse first, and that will lead to flight capital coming to America, which will help prop up our system.
P.P.P.S. You can enjoy some Social Security cartoons here, here, and here. And we also have a Social Security joke if you appreciate dark humor.
P.P.P.P.S. You probably dont want to know how Obama would like to fix the Social Security shortfall.
This is not your Bismark America, this is another Cuban scam.
MyRAs are a way to sucker poor people into giving their savings to the government in preparation for the nationalization of the pension system. This country is so addicted to spending that its coming.
Anyone that thinks this is anything more/less than another way to fleece people is a fool.
If its the wrong thing to do, count on us to do it. Nowadays the more absurd something is, the more likely it will be implemented.
All I need to know about MyRAs is that it is a rat proposal and therefore, not good.
When Germany wanted their gold back they were refused.
Once implemented, all Obama has to do is trigger a plunge in the stock market, and people will be jumping into MyRAs like rats off the Titanic.
“the money collected would be invested in guaranteed government bonds.”
There is no “guarantee” on anything when it comes to dealing
with communist government officials, especially Obama.
The goal is to get this passed and then force everyone to
roll all their retirement into this and then eventually
roll it into Social Security. In other words, they want
all retirement accounts put in the governments general fund
so they can blow it. If this goes through, the next thing
will be physical personal property. The goal is that you
will not be allowed to own anything, not even yourself.
It’s communism 101, and we are steadily marching right
The early word on the street is that the Obama administration is going to build a website where you can log in and sign up for your MyRA account. You’ll have to enter your SSN, checking account number, and some other personal info, but it’s all cool.
Only the opening probe in the move to get ALL RETIREMENT monies scarfed up by the Government.
All MyRA is going to do is to eventually steal all IRAs and force them to roll into MyRAs and steal the surplus, just as they do now with excess Social Security and Medicare tax revenues.
They're not intended to help anybody save a darn thing.
They're a vehicle for our government to eventually confiscate 401Ks and IRAs.
The problem is - what do you do with the elderly poor who, culturally, morally, or intellectually didn’t have the wherewithal to save for the period when they could no longer work?
I know the simple answer is “screw ‘em, they should have”, but can we really do that?
The harder answer is to try to get them to see earlier on the consequences of spending every dime that passes through their fingers. But, if you could do that, you’d be solving the entire poverty problem as well.
For the majority of working class people in this country, there’s not much in the way of disposable income these days left to invest in anything. People can barely make ends meet, and often that means buying on credit or “borrowing” from savings. I just don’t see where the money comes from to “invest” in MyRAs.
In Obama’s Amerika only the wealthy have money and they’re too smart to buy low returning investments and watch the value of their assets being eaten up by inflation.
MyRA - by the people that brought you Social Security, and with the added help of the IRS.
What could possibly go wrong?
exactly - it is a wealth distribution scheme.
Everyone has a fundamental right to a secure retirement, right? (gag)