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Old 04-14-2014, 08:28 AM
 
Location: Central Massachusetts
4,800 posts, read 4,848,939 times
Reputation: 6379

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Unveiled this January in the President's "State of the Union" speech is a new Roth style IRA. The hope is that those who don't save enough or dont have the income will have a new option. Please read the below article.

MyRA Plans: New Retirement Savings Option for Some - WSJ.com


I am no fan of the president. I voted for the other guys. Still we have to move on and live with the choices we as a nation make. Anyway the reason I posted this is I would like to hear some of your opinions. Bear in mind that most here on this particular forum are more aware of the consequences of non-action when it comes to planning for retirement. That is why we came here. One to learn new tricks and two to pass on the tricks and experiences we have.

Quote:

The myRA is designed to operate like a Roth IRA: Contributions will be considered after-tax and grow tax-free. Also like a Roth, myRAs will be open to individuals earning less than $129,000 and couples who earn less than $191,000, with an annual contribution limit of $5,500 (or $6,500 for those 50 or older).

The accounts will offer a single investment option—a savings bond that gives the same rate of return as the G Fund, or the Government Securities Investment Fund in federal employees' Thrift Savings Plan. (That fund's 2012 annual return was 1.47%; its average annual return from 2003 through 2012 was 3.61%. Inflation, as measured by the consumer-price index, was a year-over-year average of 2.5% for the 2003-to-2012 period.)

The accounts are designed to minimize barriers to entry so that it's easy to start saving. They are geared toward lower- and middle-income workers, Ms. Hoffine says. You can open a myRA account with just $25 and make subsequent contributions via payroll deductions as small as $5. There are no fees. For cautious investors, an additional incentive is that the principal will be guaranteed. And investors can keep the accounts when they change or leave jobs.
I took the liberty of pulling out a quote from the piece. As I said please read the entire article but the chunk I quoted here is the meat and potatos of the "myRA". Though it doesn't make a lot of money the G-fund is a better paying account over a typical savings or even CD's.

I am in the TSP where that fund is coming from. At my juncture in life I have begun putting some of my savings into that so that I at least have a baseline of money with which to call safe. I came to this forum a year or two ago and then began to impliment some of the suggestions and good ideas that I found here. To those that have helped thank you.

Anyway I don't see how it will bring in more money unless they are planning on attaching it to some of the FICA taxes. I wouldn't mind seeing something like that implimented where those who are not saving or saving enough can at least have something that they can take with them.

It is kind of funny that the Democrats cried foul over mentions of moving gradually to a payer system that will help people lean less heavily on SS and more into giving a person more responsibility for their own retirement program. Having one fund is a sad limitation but when we first implemented the TSP there were only 3 choices. Now there are 10 options for individuals. I am an advocate of giving access to investors to the funds we have in TSP.

I found this after I posted this thread. http://www.pennlive.com/business-new..._beginner.html

Tim Decker seems to agree with me. I hope people will read this as well.

Last edited by oldsoldier1976; 04-14-2014 at 08:44 AM.. Reason: adding in an addition bit of information
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Old 04-14-2014, 09:30 AM
 
Location: Sugarmill Woods , FL
6,235 posts, read 5,903,542 times
Reputation: 13647
How many years do you need to put maximum contribution of $5500 in to have enough $ to actually allow you to retire?
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Old 04-14-2014, 09:58 AM
 
Location: Central Massachusetts
4,800 posts, read 4,848,939 times
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Quote:
Originally Posted by edwardvanderbosch View Post
How many years do you need to put maximum contribution of $5500 in to have enough $ to actually allow you to retire?

Well in response to your retorical question more years then the low income worker has. Trouble is that they don't save anything as it is. Any step forward is better then the non-step they are making now. I think this is the beginning of the change over from SS to another form of retirement system. "myRA" may not be the final name or the final product but it is a step in a direction.

We know the argument in Congress on this subject. The Republicans want to try to fix it by replacing it with something. Anything is better than what is currently happening is the thought. The Democrats want to fix it by changing the existing system into something else. Anything is better than what is currently happening. Gee it don't take a fortune teller to know that the system will have to change. It also will have to be gradual so that people are not lost in the shuffle.
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Old 04-14-2014, 12:41 PM
 
Location: SoCal desert
8,093 posts, read 13,234,579 times
Reputation: 14870
The Feds copied California??

From 2012:
"SACRAMENTO (CBS / AP) – California Gov. Jerry Brown signed legislation Friday that will create the nation’s first state-administered retirement savings program for private-sector workers, over the objection of critics ..."
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Old 04-14-2014, 12:46 PM
 
29,782 posts, read 34,871,258 times
Reputation: 11705
A cheap source of bond buyers to finance government spending. Is that really helping folks save for retirement ?
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Old 04-14-2014, 01:15 PM
 
Location: Great State of Texas
86,093 posts, read 72,515,954 times
Reputation: 27565
I got over 4% return last year with money in a conservative type investment.
And here they are tooting their horn at 1.47% ?

There are still enough financial firms that let you open an IRA with a couple of hundred dollars.
If you're going to do an IRA I wouldn't do it with the FedGov that's for sure.
They are not savvy money managers IMHO
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Old 04-14-2014, 01:31 PM
 
29,782 posts, read 34,871,258 times
Reputation: 11705
Quote:
Originally Posted by HappyTexan View Post
I got over 4% return last year with money in a conservative type investment.
And here they are tooting their horn at 1.47% ?

There are still enough financial firms that let you open an IRA with a couple of hundred dollars.
If you're going to do an IRA I wouldn't do it with the FedGov that's for sure.
They are not savvy money managers IMHO
Bada Bing!
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Old 04-14-2014, 02:03 PM
 
2,593 posts, read 5,292,786 times
Reputation: 5194
> There are still enough financial firms that let you open an IRA with a couple of hundred dollars.

Yes- but are there annual fees?

The thing with a small account is that ANY fees are going to bleed the account.

>I got over 4% return last year with money in a conservative type investment. And here they are tooting their horn at 1.47% ?

ANYBODY can open a 401k retirement account. And it will offer a range of investments- and at the moment anything like a bond yields...essentially zero. MUCH less than 1.47%. AND you need to subtract fees, if any.

Not a very good return- but better than bonds at the moment.
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Old 04-14-2014, 02:20 PM
 
Location: Near a river
16,042 posts, read 18,978,143 times
Reputation: 15649
Quote:
Originally Posted by rational1 View Post
>

Not a very good return- but better than bonds at the moment.
My long-term credit union CDs are doing better than that (2.5%3%). When they mature I'm going to have to rethink.
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Old 04-14-2014, 03:55 PM
 
2,593 posts, read 5,292,786 times
Reputation: 5194
> My long-term credit union CDs are doing better than that (2.5%—3%). When they mature I'm going to have to rethink.

I was looking at bonds...and the only way right now to get much above zero is to (1) go long (and I expect bond yields to increase in the near future, so this would be a bad idea) or (2) to buy "high yield" corporate bonds- commonly referred to as junk bonds.
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