Have you heard about the MyRA President Obama introduced in 2014? It is a federal program whereby American workers will be able to contribute to a retirement savings plan not tied to an employer.
Illinois passed a bill 12/3/14 that will be begin their own similar plan in 2017 called Secure Choice. Companies of >25 employees will be required to offer this program. Those employed in these companies will be automatically enrolled in the state’s program deducting 3% of their salary and putting it into a Roth IRA (opt-outs will be allowed). These funds will be portable from job to job.
While this program is designed to help those who don’t have access to employer offered savings programs, the saver will bear the cost of administration surrendering just under 1% of their balance to administrative costs. The bill’s fact sheet states: “Only employees will be allowed to contribute tho their accounts. Neither the state nor employers can contribute or have any fiduciary responsibility or liability.” Read more at links below. http://tinyurl.com/npx5r4z, http://tinyurl.com/pvcsxqc
MyRA Preview
The Problem
According to the National Institute on Retirement Security, “the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households.
The administration claims that almost half of Americans do not have access to 401k plans or the like making it difficult to set money aside for retirement.
How it works
•Earn $191,000 a year or less to be eligible
•Initial investment= $25 minimum
•Ongoing contributions via payroll deductions as little as $5
Pros:
•High safety- government guarantee balance will never decrease
•Not tied to employer
•People are saving for retirement
Cons:
•Interest rate based on Thrift Savings Plan offered to federal employees. (2013=1.83% return)
•Profitability base on market performance
Want to read more?
http://tinyurl.com/pma88k9 NIRS Study
http://tinyurl.com/qabgjnt MyRa fact sheet
http://tinyurl.com/puwb7ch DailyFinance
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