Americans aren’t saving enough.
According to a March 2013 study conducted by the Employee Benefit Research Institute, 57 percent of American households have saved less than $25,000.
The Center for Retirement Research at Boston College has calculated the retirement income deficit — the gulf between the amount of savings Americans have and the amount they should have if they want to maintain their current standard of living — at $6.6 trillion.
Moreover, half of full-time workers and 75 percent of part-time workers don’t have access to a retirement plan through their employers.
This is why the Obama administration has introduced myRA, a modest attempt to cut into the massive retirement income deficit.
MyRA may well entice first-time savers, who would be able to set up accounts at participating financial institutions. First, like a Roth IRA, myRA savings are tax-free. Second, there are no administrative charges. Third, savings would be 100 percent secure — myRA money buys government bonds. And finally, it’s easy — the initial investment can be as low as $25 and subsequent contributions can be as low as $5.
The effect of myRA is likely more psychological than immediately material. If people start investing in the future, they’ll probably continue to do so.
It’s a sensible start.