As a broker and financial advisor I used to dream that someday (the wishful someday we all know about) there would be a way for lower and middle class income people to start preparing for retirement with a small investment account.
I had seen how getting people started with a small investment of $25 a month increases their confidence and understanding of the value of the concept of accumulating funds. Over time it has been less financially attractive for the investment community to offer services to small individual investors who aren’t part of a larger level of overall contributions from a workplace retirement plan like a 401k and 403b. This means that people who want to contribute to a Roth IRA often had few choices except to accumulate money just to get started. That of course, usually didn’t happen and nothing changed.
A new program called myRA is an option to fill that gap between getting started and entering the investment community. Is it all I dreamed of? Yes, pretty close. Is it worth learning more about if you aren’t accumulating money for retirement? Yes! Is it perfect? No, but then neither are we and our best intentions to invest when we accumulate some funds are overcome with this option.
The information below is from the myRA.gov website. As always, tell your friends and family. It doesn’t take an investment professional to get you to this solution.
The United States Department of the Treasury developed myRA® to help more people start saving for retirement.
Why was myRA developed?
myRA was developed to remove common barriers to saving and help people take the first step toward a more secure retirement.
Who is myRA for?
myRA is designed for people who don’t have access to a employer-sponsored retirement savings plans or lack other options to start saving for retirement.
How does myRA work?
People can contribute to their myRA account with as little as a few dollars a month generally up to $5,500 per year (or $6,500 per year for those age 50 and over).
Millions of Americans aren’t saving—or aren’t saving enough—for their retirement. myRA offers a simple, safe, and affordable way for people, especially those who don’t have access to a retirement savings plan at work, to get started.
myRA is a Roth IRA retirement savings account with no start-up cost and no fees. myRA has no minimum contribution requirement, so people can contribute the amount that best fits their budget.*
Contributions to myRA accounts are invested in a new United States Treasury security, which safely earns interest at the same variable rate as investments in the government securities fund for federal employees. This investment is backed by the United States Treasury and the account carries no risk of losing money.
People can fund their myRA account directly from their paycheck, or from a personal account, such as a checking or savings account, or by directing some or all of their federal tax refund to their account when they file their taxes.
myRA can be a first step
myRA can help people without access to a retirement savings plan get started saving, but it is not intended to be the only way they save for retirement. myRA is not a replacement for 401(k)s or other types of employer-sponsored retirement savings plans. People can have a maximum account balance of $15,000, or a lower balance for up to 30 years. When either of those limits is reached, savings will be transferred or rolled over into a private-sector Roth IRA where people can continue to grow their savings
From: myRA.gov. You can learn more there and enroll!