MyRA - More About Getting Votes Than Helping Middle Class

Tyler Durden's picture

Submitted by Lance Roberts of STA Wealth Management,

During this week's State of the Union address the President stated:

"Let’s do more to help Americans save for retirement. Today, most workers don’t have a pension.  A Social Security check often isn’t enough on its own.  And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401ks.  That’s why, tomorrow, I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a new savings bond that encourages folks to build a nest egg.  MyRA guarantees a decent return with no risk of losing what you put in.."

While there are few details available about the actual structure and makeup of MyRA, here are the details we know so far.

  • MyRa's would be structured like a Roth individual retirement account. Similar to savings bonds, the investments would be backed by the federal government.
  • Because the investments would be structured like savings bonds, there would be principal protection, meaning the account balance couldn't go down.
  • There would be an initial pilot program for companies to sign up to offer the accounts to their employees, and firms have until the end of 2014 to participate in the initial phase.
  • Workers would be allowed to invest if they make less than $191,000 a year.
  • There would be NO tax penalty if the investments are withdrawn.
  • Initial investments could be as low as $25 with subsequent investments as low as $5.  These investments could be automatically deducted from an individual's paycheck.
  • Once an individual accumulates $15,000, or they have the same account for 30 years, it would have to be rolled over into a traditional IRA.

Here are my initial thoughts.

1) While the President said that these "MyRA Savings Bonds" would offer a "decent" rate of return, he did not disclose how these investments would be structured.  However, if we assume that these accounts will offer the same variable interest-rate return as the Thrift Savings Plan Government Securities Investment Fund, that rate of return was 1.47% in 2012 while the rate of inflation, based on CPI, ticked up 2.08%.  With interest rates now bottoming, and many expect a continued rise in the future, that rate of return may continue to be less than the rate of inflation for the foreseeable future.

2) As I have discussed in the past, the large majority of American's live paycheck to paycheck.  American's do not lack for a vehicle to invest savings in for retirement (Roth IRA's, IRA's, 401k's, SEP's, etc.) but lack the ability to save.

3) The problem that needs to be addressed is from the economic front.  With 92.8 million individuals excluded from the work force, 1 in 3 American's on some sort of Government assistance, stagnant wage growth over the last 5 years and 1 in 5 on food stamps, the issue is about employment rather than saving.  Solve the employment problem in America and the retirement savings dilemma will begin to resolve itself.

4) There is no real incentive for anyone to actually use the "MyRA" as it has a limit of $15,000 for retirement but rather a high-yield, government guaranteed, savings account.  Since there is no penalty to withdraw money from the MyRa at any time there is also no incentive to use it to actually save for retirement.  However, if we assume that the rate of return is equivalent to Thrift Savings Plan of 1.47% that is significantly higher than what banks currently pay.  The incentive will be to use the MyRA to save for future consumption rather than future retirement.

5) Investors have a VERY poor track record of investing in the financial markets and typically fall prey to the emotional mistake of "buying high and selling low."  Given that the MyRA has to be transferred to an IRA after reaching $15,000, the guarantee of a "protected investment with a decent return" is gone.  Furthermore, there is a disincentive to reach the $15,000 level as it will change the account from a NO PENALTY withdrawal to one with a 10% withdrawal penalty prior to the age of 59 1/2.

6) Lastly, the limit of $15,000 on the MyRA is rather pointless.  If the goal is to help people fund their future retirement, the limit is rather ridiculous.  Today, if you assume that a portfolio of bonds could deliver an annualized living income of 4%, a retired couple could look forward to living a middle income lifestyle once you factor in social security income.  However, such an asset level only exists at the top 10% of the population leaving a large swath of individuals undersaved and underprepared for retirement.  A $15,000 MyRA account is going to do very little to change the dynamic of the lower 90%.

It seemed to me that the entire point of the MyRA was really more of about getting "votes" than actually helping middle class American's substantially change their retirement futures.  While the entire State of the Union address was littered with "bodies of past ideas" there was little new about changing the direction of the economy, increasing employment opportunities for the younger generation or resolving the issues of spiraling health care costs.

While Obama did make it clear roughly 11 times during the speech that "he has a pen and a phone" to resolve issues on his own - maybe it is time to start working with Congress through the Constitutional process to deliver real ideas, real reform and a better future for middle income Americans.   But then again, that is likely to be considered radical thinking.

Hopefully, this time, "if you like your current retirement plan" you will actually be able to keep it.

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Pheonyte's picture

It seemed to me that the entire point of [policy X] was really more of about getting "votes" than actually [stated goal Y].

That's true for all values of X and Y.

Boris Alatovkrap's picture

Is funny pantomime where member of political class is pretend solve problem at teleprompter.

akak's picture

Is more funny that most in working poor class believe lies of political class that they are solve problems when in fact they are create problems.

sixsigma cygnusatratus's picture

When people start to figure out that the teleprompter is the brains behind the whole operation, that teleprompter will be sent to Libya as ambassador.

The Vineyard's picture

I live from paycheck to paycheck.  My retirement plan?  I'm going to be a hobo in Miami.  Perhaps I'll live in a school bus down by the Everglades.  If you see my sorry ass. please toss me a sandwich.

James's picture

Vineyard, if you can handle Tampa i'll find you a roof

zhandax's picture

Vinyard, when I moved to Miami in 1981 (hey, 5 years of college drunkenness will lead you to do things like that), one of the people who I still remember is Joey (me makee de hat).  He was almost certainly a Marielito, but derived an obvious pleasure from meeting new people and could weave hats from palm fronds quickly and on demand.  He worked the beaches and on a good day, probably cleared $200 cash, tax free.

onewayticket2's picture

Try California....or better yet, free for over a decade with free healthcare, shelter, food, telephone and legal fees has been effortless for obama's Aunt Zutuni....and she's illegal.  just think of the spoils if you're a citizen.

Kobe Beef's picture

No spoils for citizens!!! Ever!!!

Oh regional Indian's picture

Got to hand it to the thieves of Mall Street though. MyRA sounds cheesy to us, to the target audience, this is probably chosen for maximum impact.

I wonder (as I have only read of it here) as to how it is being spoken...MyArrrAye? Or My RA, sun god supreme....

Even a stoner on a bad acid trip could not have come up with this farce though.

Where is the NOT IN OUR NAME energy? 10% of annual MIC will cure all america's ills. In fact, even here in India.


So, did you hear about the time the armadildo met a fleshlight?


EscapingProgress's picture

Oh c'mon now, you don't actually believe votes are counted do you? The purpose of MyRA is to funnel muppet money into the treasury market in an attempt to make up for the reduction in Fed purchases and keep treasury yields down. Elections are decided months, if not years, in advance.

mvsjcl's picture

It's where confiscated money will end up.


"Look! We're not stealing your money. See! We're putting it right here, and we'll give it back to you later when you need it!"

andrewp111's picture

At a 15K account limit, the amounts are too small for the Treasury to spend 10 minutes thiniking about. Even ordinary Savings Bonds are orders of magnitude larger. No, this is designed to funnel muppet money into Wall Street. Once you reach 15K, they will send you ads to transfer your account.

stant's picture

sounds wonderfull to me, wheres the web site to sign up?

socalbeach's picture

Decent article on MyRAs by Daniel Amerman.

Who Most Benefits From MyRAs: Savers Or The US Treasury?

"We will also take a look at the potentially extraordinary advantages for the United States government when savers choose MyRA accounts. Which may raise the question about whether our seemingly benevolent government is truly attempting to help "close the income and wealth gap", or whether it is instead targeting what is generally the least financially-educated portion of society, for the direct financial benefit of the United States government..."

In my opinion it's different than investing in a Ponzi scheme, because with a Ponzi scheme there's at least a chance you can make money if you get out early.  With MyRA you're guaranteed to lose as long as the inflation rate is greater than interest rate MyRA pays (1.5%/year).


LMAOLORI's picture



There's so many things to dislike about FEDra....


WARNING Protect Your Savings Stay Away from Obama's New MyRA Program



" And it is going to be run by a crony Wall Street firm. A private-sector money management firm is going to be chosen by the Treasury to run the program.

Think about this.

Do you really want to place your money in the hands of an Obama-Lloyd Blankfein type money management team?"

zhandax's picture

Hey, with the ability to freely traffic money in and out of the account, and the present status-quo unable to do anything without telegraphing it beforehand, it may be a viable new savings vehicle (at least better than what is available from any other savings vehicle ((not to be confused with investment or long-term wealth accumulation))).  FON (fuck o'douchebag now) accounts could be used to accumulate funds for metals purchase; and drawing down the account periodically should keep any withdrawal penalties from accruing.  -Probably /sarc; not sure I trust zero with my garbage, but unintended consequences have, on occasion, worked in favor of the taxpayer, and zero is so desperate this sounds ripe for the plucking-

LMAOLORI's picture



I'm pretty sure they will find a way to close down anything that would benefit the regular Joe. It seems to me insiders always come out on top. Eventually the powerful elites will turn the entire world into a cashless society and they will really use that hammer and sickle then.

-NaN-'s picture

Aaaahaaaa!  Now we all know what Corzine is up to these days. I am sure Oh-bummer lets him hang out in the White House basement hot tub, so he can learn from the best.

andrewp111's picture

Neither Savers or the UST will benefit from MyRA. It is designed to get non-savers to amass 15K, and then roll that cash into some favored Wall Street firm, so that the money can then be lost in risky investments and pad some Bankster's year end bonus.

It is just like what happened in the 2000s. Poor people who owned their homes were suckered by slick Banksters into borrowing against those houses, and then they lost the houses to foreclosure after the bubble burst. Banzai7's cartoon showing the pig that says "we want your savings" says it all.

Goldilocks's picture

"He who fights with monsters should look to it that he himself does not become a monster. And when you gaze long into an abyss the abyss also gazes into you." - Friedrich Nietzsche

NoDebt's picture

Oh, my God.  Do we really have "experts" talking about the plusses and minuses of a program that doesn't exist yet?  Straight from SOTU speech to tax law in 24 hours?  


And given the track record of this administration, I expect reality to be quite different from the promise.

snr-moment's picture

You're right. No doubt it'll be more equitable.  Perhaps 50% proceeds to go into bitcoin.

CuttingEdge's picture


Sounds a bit like:

Congress had to pass OFuckwitCare to see what was in the bill.

Obama is a snake-oil cuntsaleman. Fact.

Problem is, the wider population is too fucking stupid to see it. Maybe those health policy cancellations/premium increases may have assisted a few with enlightenment (cue Belushi in the church in BB), but for the rest?


God save the USA, cos it sure as hell needs divine intervention with this Kenyan teleprompter-inspired fuck-up in charge for 3 more years...

Colonel Klink's picture

Obama does nothing to help the middle class.  Only redistribute wealth to the poor (FSA) and the rich.  Everything he's doing is to break the back of the middle class (white).  Eric "cock" Holder prosecutes hate crimes only one way, and at the same time ignores the white collar crime that keeps them in power.

MyRAs are not about helping anyone but government and Fraud street.

fonzannoon's picture

I just realized where this is all going. You heard this here first. This is going to an eventual government backed variable annuity with living benefits. Monies will be split up between UST's and SPY with a guaranteed lifetime withdrawal % based on age at time of withdrawal. This will ensure that UST's and SPY have constant inflows and much like an insurance company, the .gov will have their actuaries structure it so they are always winning while also raking the pot.

checkmate motherfuckers, I figured it out.

Grande Tetons's picture

Could be...if the average pull out age is at the high side. Like 70 or 75...or fucking means tested. I figure it would be easier if they just made it the law that people start smoking non filtered cigarettes and to have lots of unprotected sex with Hatian immigrants. 

fonzannoon's picture

i know those variable annuities well. people delay withdrawals as late as possible to build up the withdrawal. then at 75 when they can't work that part time job anymore they start taking money out, get 5 years out of it, and drop dead.

Grande Tetons's picture

I here you. Could be like the good ole days for .gov when the AARP crowd kicked the bucket on time.

zhandax's picture

You have to read the contract (and understand it).  Equitable had a variable contract around 1990 (in one variation), that, if you allowed it to lapse and then re-instated it, allowed you to freely traffic moneys into and out of the contract with no penalties.  Probably screw-ups like this all over the board,   But the big downfall of mankind; you have to know what you are buying.

Henry Chinaski's picture

AARP crowd kicked the bucket on time.

Oh they will thanks to obamacare.  TPTB aren't stupid, just evil.  Obama is merely their tool. 

NoDebt's picture

Good job, Fonz.  I only beat you to it by a few minutes- see below.

When the Government is your only tool, everything starts to look like a governent program.

fonzannoon's picture

in actuality we have all been saying this for years. i know i have. But everyone on here thinks we need some major market crash. It seems more likely all we really need is moar Zirp, which is assured.

Grande Tetons's picture you see this putting all IRAs at peril? Call it mandatory help and assurance if you will. 

fonzannoon's picture

No, I don't. I see this differently because I don't believe a massive market crash is going to play a role, unless they decide to go for the headshot. so as a 36 year old I will keep my IRA and buy facefart and twitter and DDD and attempt to kill it. when i'm 55 and ready for my flomax commercial retirement guarantee i will roll some of the funds into my .gov backed annuity in SPY/UST's and let that grow at an average rate of 8% a year until I want my income at 65.

If there is anyone at risk here it's the insurance companies who will lose this annuity business. but many of them have already gotten creamed so bad by zirp they have raised their fees so high and lowered their benefits that it's only a matter of time before they have no inflows anyway. That is the handoff to .gov. not the IRA's which will continue to be used by the young and the wealthy who don't need the guarantee.

whaddaya think?

Grande Tetons's picture

I see your point on the life business side. Long story.  However, the young and the healthy never needed Obamacare either....and look where that is heading and who it is companies. 

Remember John Hancock Financial? I think they are owned by Manulife out of Canada. Look what these fuckers are pimping. 

No, I think we all need the guarantee whether we need it or not.  Akin to paying into SS when you could do better by investing for yourself sort of idea. 

Fonz, to be honest....I am perplexed...and I think this will take much ruminating to get even close to understanding the end game.  


NoDebt's picture

You're assuming they're going to play fair.  They won't.  When it goes down, when they get desperate, they'll come for everything.  Regardless of where it is, unless they can't track it.  Tax-advantaged accounts that wouldn't even exist without the government allowing them in the first place (IRAs, 401Ks, 457s, MyRAs, etc.) will be first, since they can change their mind about them legally with little trouble and know exactly where they are.  

Then non-qualified accounts.  Then paper certificates of any kind.  Keep tracking down from there and you know where you end up.

fonzannoon's picture

my guess is muni's get partially taxed first, then Roth's... easier sell to the public. But yeah, in time they will grab for it all. 

NoDebt's picture

The order will matter little when it does down.  Wherever it is when the screws start to tighten, they will be able to track it from that point forward.  

Grande Tetons's picture

Thanks, No Debt, Fonz and Greenskeeper. I have read your posts and enjoyed the shared knowledge. Until tomorrow. 

Professorlocknload's picture

 MyRA looks to me like the founding of a sovereign wealth fund, to be wielded around by con'gress for the purchase of influence.

The Duke of Skiatook's picture

As I have asked many times before:  How long will it be before your favorite sneaky uncle Sam creeps into your bedroom late one night with a raging hard on for a piece of your 401(k)'s ass?

PlausibleDenial's picture

@Fonz;  A couple of things.  Part of the saving for retirement myth is that you will be in a lower tax bracket at retirement.  Just does not occur for most people particularly if you are successful.  Also, I just don't understand why folks save pre-tax retirement funds (except Roths) when we are in the lowest marginal tax brackets.  Historically, the average highest marginal tax bracket is 59%.  So, if the highest marginal now is 39% why would you defer your taxes?  Moreover, for many years since 1913, the highest marginal brackets have been well into the 70% levels.  I don't think pre-tax savings makes sense until we are at least back to those levels.  Then, you might be lucky enough (doubtful) to be in a lower tax bracket at retirement age.

Most qualified plans should be recharacterized as regulated plans. 

NoDebt's picture

That's the maddening part of talkign about this in a meaningful way.  It's either brand new or old as the hills, depending on where you drop the bar to start discussions.

Greenskeeper_Carl's picture

Ya you got me there. I have known this was a inevitable for a long time, but I have always thought it would come on the heals of a big time market crash, 'forcing' the govt to come in and protect us poor peasants from market volatility and the predations of Wall Street by forcing us, at gun point, to invest a % of our money in the 'safety and security' of us treasury bonds, which allows them borrow (steal) trillions from the American people in a way that not one person in a thousand will understand. Quite brilliant, in a way. But what you have been saying could happen without any kind of crash. Either way, it's probably coming one way or another.

Henry Chinaski's picture

There are so many means, but only one inevitable end: wealth confiscation.  Bitchez!

RSloane's picture

I still doubt there will ever be a major market crash. Death by a 1000 papercuts is more like it.

RSloane's picture

Exactly right Fonz. I was thinking the very same thing. Like Obamacare, this is a program for gov't and their handlers and has little to do with the welfare of the public. They will do absolutely anything to get their hands on private money.

Hongcha's picture

That is chilling Fonz.  Yes, as long as we put every detail of our lives into a digitized format they will continue to be able to digitally pinch off as much fleece, skin and occasional muscle tissue as they can get away with.

There is only one way out.

Tim_'s picture

Presidential Retirement Benefits

"Former presidents are offered a taxable lifetime pension equal to the annual rate of basic pay for the heads of executive branch departments, like the Cabinet Secretaries. This amount is set annually by Congress and is currently (in 2011) $199,700 per year."

"For the first 7 months, beginning one month before the January 20 inauguration, former presidents get transition funding to help them transition back into private life."

"The President’s FY2013 budget requested $8.95 million for PTA-authorized purposes during the 2012-2013 presidential transition. Of this total, $1 million was requested for briefings and related transition services for incoming personnel associated with the new administration. These recommendations were endorsed by Congress and included in the Continuing Appropriations Resolution of September 28, 2012" (Presidential Transition Act: Provisions and Funding, p. 3).

"Six months after a president leaves office, he or she gets funds for an office staff. During the first 30 months after the leaving office, the former president gets a maximum of $150,000 per year for this purpose. Thereafter, the Former Presidents Act stipulates that the aggregate rates of staff compensation for a former President cannot exceed $96,000 annually."

"Under a law enacted in 1968, the GSA makes funds available to former presidents and no more than two of his or her staff members for travel and related expenses."

"With the enactment of the Former Presidents Protection Act of 2012 (H.R. 6620), on Jan. 10, 2013, former presidents and their spouses receive Secret Service protection for their lifetimes."

"Former Presidents and their spouses, widows, and minor children are entitled to treatment in military hospitals."

"Former presidents are traditionally granted state funerals with military honors."