President Obama‘s plan to tackle the U.S. retirement crisis is ambitious and well-intentioned but unlikely to have much of an effect, experts say.
In his State of the Union address, Obama proposed a new type of retirement account for the 4 in 10 Americans who don’t have access to 401(k) plans at their jobs.
The accounts, dubbed MyRA, would offer guaranteed investment returns, no fees and tax-free profits.
But Obama’s proposal rests on a pair of uncertain assumptions: that employers would be willing to offer the accounts and that financially stretched low-income workers would agree to participate in them.
In contrast to 401(k) plans, companies would not offer matching contributions, typically the biggest inducement for workers to get involved.
“I don’t expect it to accomplish any increase in retirement savings,” said Teresa Ghilarducci, an expert in retirement issues at the New School in New York.
The president signed a directive Wednesday ordering the Treasury Department to create MyRA (my retirement account). A pilot program is expected to be rolled out this year.