Published On: Sat, Jun 18th, 2016

Worried about Retirement? Try myRA!

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Retirement MyRAIf you are at a job that doesn’t offer a 401k or other retirement savings plans there’s another option for you.   There’s a new financial product that the U.S. Treasury is offering to people who may be looking for alternatives to traditional retirement plans. Well, it’s not really that new, it was introduced in 2014 – it’s a form of Roth IRA called My Retirement Account or  myRA for short. It’s backed by the government and their website is pretty cool www.myra.gov. It spells out everything you need to know and is very user-friendly.

Here’s how this retirement plan works:

First, you open a myRA account at myra.gov. This enrolls you in a traditional Roth IRA that only invests in a special U.S. Treasury retirement savings bond. Because it’s a treasury bond, it’s an extremely safe investment. The site goes so far as to say that you won’t lose the money you put in. This account doesn’t cost anything to open, has no fees, and doesn’t require a minimum savings amount. That’s pretty awesome!

You can keep your money in this account until one of two things happens:

* 30 years have gone by since the account was opened.

* Your account balance reaches $15,000.

Once either of these happen, your account will be rolled over into a traditional Roth IRA held by a private company. You can also to roll it over to a private company you choose at any time. After the rollover, it’s just like a normal Roth IRA.

Since the investment is in a Treasury bond, the rate of return is pretty low, but it’s not as low as a savings account. The average annual return for the past 10 years is 2.94%. Also, like most IRAs, you have a yearly contribution limit- you can put in up to $5,500 a year, or $6,500 a year if you’re over 50. These numbers get adjusted yearly.

There are some limitations, but they’re not that bad. If you make too much money, and we’re talking six figures a year here, you won’t qualify. Also, your income has to be from money you earned. This includes self-employment income but doesn’t include things like property investments or interest you received from investments.

Another ‘good’ thing is that you can withdraw some of the principal balance out of the account if you need it for an emergency. However, you can’t withdraw the interest without getting tax penalties. I’d hope that you’d never have to dip into your retirement balance like this, but it’s good to know the option is available

What I like about it?

  • You can invest as little or as much as you want and have it automatically withdrawn from your pay or bank account. Seriously, if you only want to start with $2 you can.
  • Very easy to set up.
  • Pretty safe bet in a U.S. Treasury Bond, which means it doesn’t earn much interest, but still good.
  • Great option for people who may not be as savvy of an investor and don’t want to put off saving for retirement any longer.

If you want to learn more, head on over to https://myra.gov/get-answers/.

– Dorethia Kelly

Dorethia Kelly, MBA is the president of Conner Financial Coaching, LLC, providing results-oriented personal finance and business coaching services. She is also the founder of the popular #MoneyChat personal finance blog, themoneychat.com and online Twitter chat hence the inspiration for… #MoneyChat THE BOOK! How to Get Out of Debt, Manage Your Money and Create Financial Security! Get your copy on Amazon today!

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Source: The Money Chat

Dorethia Kelly

Dorethia Kelly

Dorethia Kelly, MBA, provides results-oriented personal finance and business coaching services. She is also the founder of the popular #MoneyChat personal finance blog, themoneychat.com and online Twitter chat hence the inspiration for… #MoneyChat THE BOOK! How to Get Out of Debt, Manage Your Money and Create Financial Security! Get your copy on Amazon today!
Dorethia Kelly

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About the Author

- Dorethia Kelly, MBA, provides results-oriented personal finance and business coaching services. She is also the founder of the popular #MoneyChat personal finance blog, themoneychat.com and online Twitter chat hence the inspiration for… #MoneyChat THE BOOK! How to Get Out of Debt, Manage Your Money and Create Financial Security! Get your copy on Amazon today!

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African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study