, the retirement savings vehicle created by the Obama
administration and announced during the President's State of the
Union address, has gotten a lot of blogger attention, most of it
Perhaps that's not entirely fair. Comments characterizing it
a start, but won't save retirement
" are true so far as they go. But I think they may be missing
what is most interesting about myRA: it shows a solid
understanding of the behavioral barriers to saving. It is in
effect, investor training wheels.
Learning to Ride
Riding a bike is easy - once you've actually learned how. When
you are a child first learning how, your biggest barrier to
success is fear of falling. Training wheels remove that fear and
get you used to riding around. myRA does something similar.
Consider how it directly addresses barriers to retirement savings
for some people:
Fear: It's expensive to start
It's only $25 to open a myRA.
Fear: I don't know who to trust
Investors can open one at work, without having to sort through
competing claims from advisors or financial services firms.
Fear: Don't I have to know a lot about
There's only one choice, based on US Treasury securities.
Getting started is the point, not proving investment savvy.
Fear: I don't want to lose money.
According to the Treasury, myRA accounts will deliver better
than money market returns and no loss of principal. A modest
return, but again, the point is overcoming a barrier.
Fear: I don't want to be tied into something.
Since myRA investments are not tax deferred (they are funded
with after tax money), there is no penalty for withdrawing the
money. It's available if it's needed.
Once a myRA account reaches $15,000 (or is open for 30 years),
the saver must roll over the money into another account,
presumably an Individual Retirement Account. In other words, the
training wheels have to come off.
myRA: Probably Not for You?
Since you are reading a retirement blog post, the odds are
that you are comfortable with investing or at least with the idea
of saving for retirement. myRA is probably not for you. But you
may know people, friends or family, for whom myRA is a good way
to get comfortable with the critical job of saving for
And if you think about the intelligent way myRA takes into
account common fears expressed by non-savers, it may help you
find ways to talk to and encourage friends who need help getting
For more information on myRA, visit the White House blog
Chip Castille, Managing Director, is head of the
BlackRock US Retirement Group.
You can find more of his posts
BlackRock is not involved in the sale, management or
administration of myRA accounts
This material is provided as an educational tool and should
not be considered investment advice. BlackRock cannot be held
responsible for any direct or incidental loss resulting from
applying any of the information provided in this publication or
from any other source mentioned. BlackRock is not engaged in
rendering any legal, tax or accounting advice. Please consult
with a qualified professional for this type of advice.