MyRA was a program started to help young people and the working poor invest for retirement. Contributions could be as low as $5. The hope that young people and people with few resources could take part in investing for retirement (because we all know Social Security isn’t gonna be enough) was a lofty goal. This may have been especially helpful for people of color since we’ve all read the studies about net worth and cycles of poverty.
Unfortunately, the MyRA program will be stopped under the Trump administration. It was never really given the resources to take off. That was the main reason given for its close. The working poor don’t have lots of options to move up the socio-economic ladder and now they’ll have one less option.
If you’ve read “10 Things College Students Need to Know About Money” you know that I am a HUGE advocate of young people investing from retirement as soon as they have earned income. For many people that time is while in high school or college while you’re working part-time or eeking a living out of financial aid. Often, young people don’t know how to open an Individual Retirement Account (IRA) or don’t think they have enough money to open one (get my list of investment accounts you can open for less than $100 here).
The United States government is here to help with the new myRA (my retirement account, get it?). According to the U.S. Treasury, these accounts are:
- Easy to set up (you can have the money deducted from your payroll check if you wish)
- Designed to help people with little money or no access to a retirement plan from work.
- No risk of losing money (funds are invested in a Thrift Savings Plan-like account)
- The funds you invest are NOT tax-deductible but you also can take them out whenever you like without penalty.
The best part? There is no minimum amount required to start an account and according to Forbes, ” additional contributions only have a minimum of $5.” The goal is really to get you into the habit of investing when you are young and have few dollars. The return isn’t great (think 1% or 2% per year) compared to a regular traditional or Roth IRA or 401(k)/403(b) but starting now with a few dollars and little interest is better than not doing anything.
Fool.com also notes:
Account holders can contribute up to $5,500 per year ($6,500 if over 50) and may continue to contribute until their total account balance reaches $15,000. All funds are invested in a newly created Treasury bond
Once you’ve grown a nest egg big enough to open a traditional or Roth IRA, or you have a job that provides a 401(k) or 401(b) hopefully with matching, you can roll the money over into a new account.
Click here to find out more about myRA accounts.