myRA Retirement Plans: Everything You Need to Know

As if we didn't have enough acronyms in financial services, this week we added a new one: "myRA" — which stands for "my Retirement Account." As Marketplace explained in a radio segment, President Obama stumbled a bit over the name in his State of the Union address "and there's still some confusion about what they'll be called — some of the folks we talked to are pronouncing it 'Myra,' like the name." But the idea behind the accounts is simple: They are aimed at workers whose employers do not offer traditional retirement accounts.

Details:

• From the horse's mouth: "FACT SHEET: Opportunity for All: Securing a Dignified Retirement for All Americans" (The White House)
• "Obama Signs Order for Retirement Accounts" and "Nine Things to Know About Obama's myRA Accounts" (The Wall Street Journal)
• Administration officials fleshed out a few of the details for reporters, but can Obama's myRA lure workers who don't save for retirement? (Bloomberg and BloombergBusinessweek)
• “While this will not solve the retirement income shortfall that exists in the US, it is a step in the right direction,” Jamie Hopkins, a professor in the retirement income program at the American College, tells Tara Siegel Bernard of the New York Times. “These new accounts will open up access to tax-advantaged retirement savings vehicles that many people do not currently have access to because of cost-prohibitive barriers.”
• Romina Boccia, Heritage’s Grover M. Hermann Fellow in Federal Budgetary Affairs, explains what this is all about in Q&A: What Is This “myRA” Retirement Account Obama Announced? (The Foundry)

Opinion:

• The editors at Bloomberg note that the "proposal might do some good — not by helping workers, most of whom are unlikely to take advantage of it, but by spurring a discussion about how to fix a broken retirement system." And while myRAs "will help a bit," solving this problem "is a formidable long-term challenge." (Bloomberg)
• Lisa Mensah, executive director of the Aspen Institute Initiative on Financial Security, writes in "New Retirement Accounts Offer Workers Hope" that "it is heartening to see the president and the country’s leaders take seriously the need to improve the savings system that will ultimately drive household financial security in the US." (Aspen Institute)
• In "President Obama Focuses on Retirement Security," Mercer applauds the President's effort to extend the reach of retirement programs, but suggests that "expanding and improving current programs may be more effective across the entire spectrum of workers than creating additional retirement programs." (Mercer, PDF)
• Obama's myRA proposal is good and bad, says Teresa Ghilarducci, SCEPA director, but leakage issues doom it to fail as a solution to the retirement crisis. (SCEPA blog)

Reaction:

Whether you applaud or decry President Obama's myRA plan, most agree a retirement-savings crisis is looming and that reform is needed. As Bloomberg View put it: "MyRAs will help a bit, but the problem will eventually demand much bolder thinking."

What do you think about the myRA accounts? What ideas do you have for improving retirement security? Tell us in the comments section below.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: Official White House Photo by Pete Souza