In President Obama’s 2014 State of the Union Speech he mentioned the myRA,

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. And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans. Offer every American access to an automatic IRA on the job, so they can save at work just like everyone in this chamber can. And since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans.

While I plan to update this post when more information comes out about the product, the Treasury’s website thus far hasn’t provided any real information,

a new simple, safe, and affordable “starter” retirement savings account that will help millions of Americans begin to save for retirement.

Despite the lack of information I can safely say that whatever myRA is, it won’t change retirement and/or retirement planning.

Why Won’t the myRA Change Retirement?

According to the Investment Company Institute,

An estimated 48.9 million U.S. households, or 40.4 percent, owned IRAs as of 2012. An estimated 39.4 million households owned traditional IRAs, making it the most common type of IRA. A total of 20.3 million households owned Roth IRAs, and 9.2 million U.S. households owned employer-sponsored IRAs such as SEP IRAs, SAR-SEP IRAs, or SIMPLE IRAs

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At the end of the fourth quarter of 2012, an estimated 46 percent of IRA assets were held in mutual funds, while the remaining assets were managed by brokerage accounts, banks, and insurance companies. In 1990, mutual funds’ share of IRA assets stood at 22 percent

and from Wikipedia

The average and median IRA account balance was $54,863 and $15,756, respectively, while the average and median IRA individual balance (all accounts from the same person combined) was $69,498 and $20,046. The average is significantly higher than the median (over three times higher), reflecting significant positive skew – very large balances increase the average.

So if IRAs and its cousins are “popular” with 50,000,000 or so participates why won’t the myRA matter for most American’s retirement?

  1. If it is a bond type product it won’t nor should it be used for those who need  to take risk to increase their returns.
  2. American just don’t save that much money in their IRAs and Roth IRAs.  Look at those average and mean balances?! They just aren’t that high.

So since most people don’t save enough for it to matter and this product probably isn’t the right place to save/invest for most the myRA is just likely not to matter, but I hope I am wrong. One way to make it matter? Turn the myRA into a non-sustainable deferred income annuity similar to that other government program that is an actuarial disaster but everyone puts their faith in …social security!