The myRa for low-wage workers or people without employer retirement account access

What is a myRa? ” The White House characterizes the myRA as a “starter retirement savings account” for the millions of Americans who do not currently have a retirement savings option at work.” The U.S. Treasury Department labeled the myRA a new type of Roth IRA with all the rules that apply to the Roth IRA such as “The 2014 maximum annual contribution of $5,500 ($6,500 if you are 50 or older)”.

MyRA accounts are helpful for folks between 18 and 30. “A survey by the salary website Pay Scale and Millennial Branding found that 47 percent of these young adults work at companies with less than 100 people, and less than half of these companies offer 401(k)s.” With myRA, employers will not be responsible for administering the fund. Instead, employers will automatically deduct money from employees’ checks and deposit that money into their myRA accounts.

Savers who change jobs can take their myRA accounts with them. The money in a myRA can be rolled over to a private-sector retirement accounts at any time. If the balance on the myRA reaches $15,000 or the age of 30 years of age is reached, which ever comes first, the balance must then be transferred to a private sector Roth IRA because the contributions have already been taxed. You can make qualified, typically tax-free withdrawals, even if your income or changes in the economy move you in a higher tax bracket.

If a myRA or Roth IRA is not a option for you, then a Traditional IRA presents both tax advantages and investment opportunities for qualified individuals. With a Traditional IRA, your earnings are not only tax-deferred; qualified individuals’ contributions are also tax-deductible. Traditional IRAs and 401(k)s have higher opening contributions than myRas and Roth IRAs.

A myRA account is a good starting point for people just entering the workplace. Hopkins says, the low initial contribution requirement of $25, hopefully, will encourage people with modest incomes and savings to begin saving for retirement. “The myRA, like a Roth IRA, requires that you pay taxes before you deposit money into the myRA account. So you won’t get any income-tax deductions. And you won’t earn a lot of interest on a myRA.” The benefit of having a myRA retirement account is if you have an emergency and need cash, then you still have access to the fund. 

According to the Official Census data from 2010, 3.5 million seniors live below the poverty level. For many seniors, Social Security Retirement is the only means of income to pay for daily living expenses as well as costly medical care. “The key to a secure retirement is looking for low-risk, safe investment that help accumulate adequate interest while deferring taxes until you’re ready to receive disbursement.” This is the reason a myRA or Roth IRA is a good retirement investment for your future to subsidize your Social Security checks.

Social Security retirement has traps that will trip you up and keep you below poverty level if it’s your only means of income. “There are limits on how much you can earn while collecting benefits, and if you exceed those limits, your Social Security benefits will be cut substantially. “You should consider living off other funds and delay taking Social Security until age 70. Delaying taking benefits until age 70 will yield you as much as 8 percent increase in benefits for each year you delay. Certified Financial Planner professional and director of My Retirement Education Center Steve Gaito says, “In addition to receiving a higher benefit, the annual cost-of-living adjustment will be based on the higher number.” 

Previously, investors who wanted to find a low-minimum fund had to settle for higher cost. The only option was high minimums or high costs. This is what the myRA is attempting to solve. According to The Seattle Times, the main idea is having fund in the myRA flow through employers. This means money is set aside before it goes home with investor and spent. 

In conclusion, the myRA is a federal program designed to help the 47 percent of Americans who are low-wage earners, who work for a company that doesn’t offer a retirement plan, or for workers between 18 and 30 seeking to start investing in their future. Social Security benefits are said to run out and won’t be there for many under fifty. Therefore, myRA is an option for many who do not have access to a retirement plan at their jobs. It is also affordable with a starting cost of $25 and as little as $5 to fund it monthly.

It’s your present, your life and your future. Take advantage of the opportunity of a lifetime.