If it would cause millions of low-income Americans to save for retirement who are not currently doing so, then, it just might be a “breakthrough”.
[pullquote]I think it’s going to cause a lot of people to actually get started saving[/pullquote]Sheryl Garrett, head of Garrett Network of financial planners, told Ann Marsh, reporter for OnWallStreet.com, “I think it’s going to cause a lot of people to actually get started” saving, thanks to the fact that MyRA allows people to save as little as $5 or $25 on a regular basis, without necessarily noticing the money is gone.
“A common reason why young people have not started to save is that they fear they will lose money.” Garrett says she had engaged in an ongoing dialogue with a Treasury Department official about how an automatic savings program could be implemented to help lower-income Americans prepare for their retirement. Perhaps the MyRA program could eventually grow to serve this purpose, Garrett thinks.
But she says she still has questions and concerns. For one, she feels the government should not design an investment program; that should be the role of the industry, BUT the industry could not have guaranteed the accounts.
[blockquote]“There won’t be a tax penalty if [investors] withdraw funds,” Garrett adds. “Tax penalties keep us from raping and pillaging our savings accounts, but, on the other hand, those penalties also keep us from saving in the first place.”[/blockquote]
A potential impediment to the program’s success is whether or not low-income Americans can even afford to make very low contributions into MyRA accounts, as they struggle now to make ends meet.
There will be a lot more debate on MyRA accounts in the days and months to come.