THE myRA PROGRAM: WILL AMERICANS SAVE?
Authors : Sara Bennett, Joseph Prinzinger
Pages : 0-0
View : 4 | Download : 3
Publication Date : 2015-11-08
Article Type : Other
Abstract : In his 2014 State of the Union Address, President Obama announced his plans to create a new retirement account to be known as the my RA (My Retirement Account) program to address the underinvestment problem for lower income families in America. My RAs are specialized Roth IRAs that can only be invested in the Government Securities Investment Fund (G Fund) of the Thrift Savings Plan for federal employees. Our analysis compares possible my RA investment outcomes with possible Roth IRA investment outcomes to determine which investment vehicle offers the best outcome to potential investors. We examine outcomes for investments in the G Fund ( my RA) and five mutual funds (Roth IRA). We find that equity mutual funds substantially outperform the G Fund. Despite this, my RAs might offer something in the way of helping individuals become disciplined investors by providing low barriers to entry. Additionally, my RAs might provide an interesting, and higher-yielding, option for short-term investment needs for individuals who already take advantage of employer-sponsored retirement accounts.Keywords : myRA, IRA