Many Americans would like to save for retirement, but haven’t found an easy way to get started. According to a 2015 Federal Reserve Report, 31% of non-retired people said they have no retirement savings or pension whatsoever.
The government backed myRA is a new type of savings account designed for low and middle-income earners, as well as people who aren’t offered a retirement savings option through their employers.
Available to individuals earning up to $129,000 per year, an account can be opened with as little as $25 per month. Additionally, because the account principle is backed by the government, the account balance will not go down. In this way you might compare it to a government savings bond.
Contributions can be made via payroll deductions, which can be as low as $5. This new account combines the benefits of a traditional savings bond with a Roth IRA into a unique way to save for retirement. Individuals who want to get started can contribute up to $5500 per year, and those who are 50 years of age or over can contribute $6500 per year.
This new retirement account is designed as a great way for new savers to take small steps toward their retirement. Because this is a great beginning step to retirement savings, when the myRA balance reaches $15,000, the money will need to be rolled over into a privately managed IRA. As well, myRA accounts will need to be moved into another vehicle after 30 years.
A myRA account costs nothing to open, and there are no management fees and no minimum start up figure. Additionally, this account earns the same variable rate as investments in the Government Securities Fund for federal employees, which returned 2.31% in 2014 and has had an average annual return of 3.19% across a ten year period, ending December 2014.
myRA can help people get started with a retirement account, especially if they aren’t offered one in the workplace. They can fund this account from their paycheck, from a savings or checking or from their federal tax return. If you are a person who has struggled with figuring out how to get started putting money away for retirement, you may want to look into this at myra.gov. It does offer a simple way to begin this journey into your future.