Little-used federal savings plan gets an early retirement
With the
Those who bothered with myRA in the first place, that is.
"That the government took some initiative in this area is a good thing," said
Launched in 2014, myRA - short for My Retirement Account - was created to help low- to middle-income earners start saving for retirement. A no-fee, no-minimum balance, nondeductible Roth IRA for individuals without an employer-sponsored plan such as a 401(k), it allowed savers to contribute up to
Funds were invested only in a new
"Unfortunately, there has been very little demand for the program and the cost to taxpayers cannot be justified by the assets in the program," said
The numbers bear Carranza out. Just 30,000 myRA accounts were opened in its three years of existence, with a total of
It has cost
"From a cost-benefit perspective, it just didn't work," Rausser said.
According to a 2016 GOBankingRates survey, 35 percent of all adults in the
The myRA effort "relied on individuals to take action, but this unfortunately proves that most individuals are likely to take no action," Rausser said.
Although no data was available on the number of Fairfield County residents with underfunded savings accounts, banks said they are stepping up efforts to aid those who had been relying on myRA.
"Our FutureTrack program can help them transition to a qualified retirement account," said
Restructuring debt is a top priority, she said. "We start with the debts that have the largest interest rates and manage them down to allow them to make contributions - or, hopefully, additional contributions - to a retirement fund."
Short-term savings programs can help establish an automatic savings investment strategy. "There are various tips and tricks we can use so that they don't feel the pinch at the start," said Piche. Typically, that can involve setting aside as little as
Retirement savers also can take advantage of employer-sponsored 401(k) plans. "Most employers have some sort of matching plan," in which employee paycheck contributions to a plan are fully or partially matched by the employer, Piche said. "If you can save 5 to 6 percent of your salary each year in a 401(k) and the employer matches that contribution, you've hit a home run."
When saving for retirement, "There can be pitfalls with fees and expenses," said Rausser, "but talking with a financial adviser is always recommended."
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