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Vice President Joe Biden applauds and Speaker of the House John Boehner looks on as President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington, January 28, 2014. REUTERS/Larry Downing (UNITED STATES  - Tags: POLITICS)   -

The nation's looming retirement crisis was entirely predictable. Stagnant wages, skyrocketing costs for education and for health care along with the great recession have all combined to make saving for retirement a pipe dream for most low and middle income people. Private pensions are pretty much a thing of the past. Most of us, two-thirds in fact, are accumulating debt faster than we're accumulating retirement savings. The great recession tanked plenty of 401(K)s (which many workers don't have, anyway), and erased the home equity many near-retirees were counting on for a cushion. Retirement could be another pipe dream for a whole lot of baby boomers and their children.

So what does President Obama's new proposal for "Securing a Dignified Retirement for All Americans", simply known as MyRA, do for us? Not enough.

Here's the basics of it. Low and middle income earners who make less than $191,000 a year, and whose employers don't offer traditional defined-contribution plans like 401(k)s would be able to invest in the portable account—it can be taken from employer to employer. Investment is through payroll deductions of as little as $5 a paycheck, after an initial $25 investment. The money goes into a government-backed bond pegged to the Government Securities Investment Fund offered to federal employees through the government's Thrift Savings Plan, a retirement program. That's a low-risk, low-return fund that last year yielded 1.47 percent and has averaged 2.24 percent over the last three years. It tends to hover right around the rate of inflation, so the returns aren't going to be great. But these bonds are protected from losing face value, and won't be subject to market losses, so the account balance cannot go down. There are no tax penalties for withdrawals from the fund. After a fund reaches $15,000, it would be rolled over into a conventional Individual Investment Account, an IRA. That's where the financial services industry, which makes a good bit of money off of managing our private retirement funds, kicks in.

For analysis of the plan, go below the fold.

The IRA rollover part is where folks like those at the Economic Policy Institute see the bad news in what is otherwise a modest, but somewhat helpful program. Here's EPI's Monique Morrisey:

The bad news is that once accounts reach a low $15,000 threshold, they would have to be rolled over to an IRA. Though some IRAs provide reasonable investment options at a reasonable cost, most do not. The president’s plan may serve to funnel savings into these accounts without really addressing the failures of the current system.
It does help keep the financial services industry happy, as they'll be able to gobble up those savings once they've amounted to anything. If they end up amounting to anything. There's no disincentive for people to withdraw funds as they need to. But there's also the more basic problem that, especially for the really low-income workers the plan is intended to help, having anything left over for savings at all is a big hurdle.

There are much better ways to shore up retirement security for low and middle income workers. First and foremost, recognize the reality that Social Security isn't a supplement for most people any more, it's the majority of what they've got to live on. Expanding Social Security, making it more generous and making cost of living adjustments actually meet increasing costs of the things seniors spend most of their money on, is one good solution. Sen. Tom Harkin has another, his Universal, Secure and Adaptable Retirement Funds Act, which would supplement IRAs and 401(K)s a safe fund with higher returns than the MyRA.

President Obama's MyRA isn't a bad idea, but it's not a solution either, and it shouldn't serve as a distraction from the need to both strengthen and expand Social Security and other safe retirement savings options. Instead of a solution, it should be viewed as a starting point for talking about the real ways we can divert the looming retirement crisis.

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Comment Preferences

  •  true, but it is a step forward as opposed to the (16+ / 0-)

    GOP looting attacks on SocSec

    Instead of a solution, it should be viewed as a starting point for talking about the real ways we can divert the looming retirement crisis.

    Warning - some snark may be above‽ (-9.50; -7.03)‽ eState4Column5©2013 "I’m not the strapping young Muslim socialist that I used to be" - Barack Obama 04/27/2013

    by annieli on Sat Feb 01, 2014 at 12:02:05 PM PST

    •  It's not much of a step forward (22+ / 0-)

      since the accumulation of $15,000 forces people into the greedy arms of Wall Street with their fees and no guarantee that those funds won't be used for Wall Street gambling.

      If sickens me every time I see a senior at work at a minimum wage law.  Those who I've spoken to tell me that they are NOT working by choice.  They need to keep working to pay bills, get groceries, or pay medical or prescription bills.  

      Returning to the days of defined pension plans and decent, family supporting wages is the only way to provide for a dignified retirement.

      There already is class warfare in America. Unfortunately, the rich are winning.

      by Puddytat on Sat Feb 01, 2014 at 12:50:44 PM PST

      [ Parent ]

      •  I'm with Puddytat on this. (10+ / 0-)

        Like Lucy and the football, it encourages savings and then, after it rolls into an IRA, snatches them away. I wouldn't be so cynical, but our IRA is about what it was 15 years ago in real money.

        "The 'Middle' is a crowded place - that is where the effective power is - the extreme right and left might annoy governments, but the middle terrifies them." Johnny Linehan

        by northsylvania on Sat Feb 01, 2014 at 12:58:28 PM PST

        [ Parent ]

        •  me too (3+ / 0-)

          wall street must be drooling all over themselves over this plan. I guess they're going  to get our money one way or another.

          •  I don't think (1+ / 0-)
            Recommended by:
            OooSillyMe

            they're drooling so much over this.  The people it targets are people that already have access to Wall Street-centric plans, or would end up in Wall Street centric plans once they saved enough to put in as the seed capital for a traditional IRA.

            What they are drooling over is trying to get their hands on the monies currently left in the remaining defined benefit pension plans when those that still have them are dumped into 401ks or whatever.  Currently, Wall Streeters don't make much on the hundreds of billions still in pension trust funds, because many of them are managed internally by the funds themselves - locking the Wall Streeters out of collecting an annual "maintenance fee" for "managing" those funds.

            But throw that few hundred billion into their hands to "manage" and swipe 1% - 2% a year off the top as a "fee", and they'll make billions each and every year - until they take it all, just like they've done with most 401ks.

            It is the idea of getting their hands on that money that is in large part driving - and paying for - the anti-pension crusade currently occurring.  The ROI on those few million a year they spend disparaging the pensions of those that still have them could lead to their best payday ever when one considers the sheer dollar amount of fees they'd collect.  Most of the funding for anti-pension organizations (that doesn't come from opaque/masked sources that you can't trace) can be directly traced back to the finance industry.  That's no coincidence.  Same deal with anti-pension politicians - they get a lot of their money from the finance industry.  Again, no coincidence there either.

      •  Depends on the IRA. (1+ / 0-)
        Recommended by:
        llywrch

        Vanguard IRA funds have extremely low expense ratios. Index investing with them is very nearly free.

      •  It's not a bad idea (2+ / 0-)
        Recommended by:
        Puddytat, cheese weasel

        Three things people need to do before playing the market, are
        1. put aside enough money to pay the bills for at least 3 months if all hell breaks loose. (this done on a percentage of income becomes quite doable.
        2. buy a mutual whole life insurance policy to take care of the family in case anything happens to a bread winner and to add to retirement funds if the money isn't needed for children any longer (this actually becomes your own personal social security program)
        3. buy a very modest duplex in the best neighborhood you can afford both to live in and to help with regular cash flow

        The accounts that Obama is offering would contribute to number one.  This is the way workers get ahead...social security is a huge part of the mix but anyone who counts on social security to do all of it will be on a starvation budget when they retire.  None of the mentioned tools will make much of money but they all contribute to stability when the wind blows.  Once all the tools are all in place, go ahead and gamble in the market.

        As regards not having enough money to contribute to a plan, I've put a quarter aside based on the percentage of income coming in.  It's a discipline.  

        What I've typed here will not be popular but its a system that works.  Workers were talked into stripping the value out of their homes and insurance policies for the benefit of toys, cheap financial products and the market.  That's part of the problem people are facing now.  I'm the first person in my immediate family for two generations, including my husband, to work for someone else.  We've been self employed and we had to create our own retirement funds.  This is the only way we could have survived.  There were a lot of years of starvation but we knew we had to create our own futures or face no future at all.

        Newt 2012. Sociopath, adulterer, hypocrite, Republican.

        by tikkun on Sat Feb 01, 2014 at 04:03:14 PM PST

        [ Parent ]

        •  I like your idea about the 3 tools. (0+ / 0-)

          And I'd add a fourth.  When you can, buy a dependable, fuel-efficient car.  You'll save a lot of money by not spending it at the garage and the gas pump.

          Be alert, look alive, and act like you know. --A Tribe Called Quest

          by cheese weasel on Sat Feb 01, 2014 at 09:51:34 PM PST

          [ Parent ]

    •  Not a step forward but neutral, not value added. (5+ / 0-)

      What Joan says is true...

      The nation's looming retirement crisis was entirely predictable. Stagnant wages, skyrocketing costs for education and for health care along with the great recession have all combined to make saving for retirement a pipe dream for most low and middle income people. Private pensions are pretty much a thing of the past. Most of us, two-thirds in fact, are accumulating debt faster than we're accumulating retirement savings. The great recession tanked plenty of 401(K)s (which many workers don't have, anyway), and erased the home equity many near-retirees were counting on for a cushion. Retirement could be another pipe dream for a whole lot of baby boomers and their children.
      ...but I disagree in the case for Boomers. Boomers have had, for most of our work lives, pensions, have worked through time to both accumulate, lose, and regain 401k values and home equity, and have had prime income periods during key - perhaps once in many lifetimes - economic periods of growth (e.g., technology bubble). So, sure many Boomers are in trouble but not precisely for all of these reasons. The hardships Joan lists will hit Boomers' children in far far greater numbers so that their problems may be similar to Boomers plus the costs for all these negatives plus the overhead and spillover costs from the Boomers without retirement funds.  
      •  I would be curious--what is your basis for (4+ / 0-)

        stating that "Boomers have had, for most of our work lives, pensions,"?

        Mr M and I are fortunate in that we each have both public and private supplemental (to Social Security) retirement plans.

        But from my personal and professional experience, we are the exception--not the rule.

        For over three decades, I advocated for social services for low and middle income clients--most of whom DID NOT have any retirement plan other than Social Security.  (I am referring to 'Boomers.')

        Let's not forget that according to the 2010 US Census, just less than 1/3 of Americans have a college degree.

        And in my experience, this is a huge factor regarding whether or not one is likely to have retirement benefits other than Social Security.

        If your point it that there will be even fewer "defined-benefit" pensions in the future--I concur.

        Otherwise, I think that the picture that you paint for the majority of Baby Boomers, is a bit rosy.

        Mollie

        "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


        hiddennplainsight

        by musiccitymollie on Sat Feb 01, 2014 at 01:57:48 PM PST

        [ Parent ]

        •  Agreed (4+ / 0-)

          I have 12 years to go, I had a 401k once that I had to raid to pay doctor bills with a few years ago when my wife got sick and our insurance didn't pay it. I have never been fortunate enough to have a job with a pension. Restarted my 401k in 2005, we all know what happened to that. I consider any 401k I build up now as a supplement to SS, assuming those assholes on Wall Street don't screw us into the ground again. Retirement for me is a pipe dream. If I only have to work part time during "retirement" I'll consider myself lucky.

          If you are not the lead dog, the view never changes.

          by RepresentUsPlease on Sat Feb 01, 2014 at 02:15:44 PM PST

          [ Parent ]

          •  Thanks--you've made several excellent points, (3+ / 0-)
            Recommended by:
            jbsoul, thanatokephaloides, kck

            especially just how "easy" it is for our retirements to be siphoned off for necessary medical expenses.

            We must all remain vigilant, and stand up against any attempts by any Administration, to enact further cuts to our social safety net programs.

            Mollie

            "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


            hiddennplainsight

            by musiccitymollie on Sat Feb 01, 2014 at 02:21:11 PM PST

            [ Parent ]

            •  Agreed but wrt retirement, we need to stop... (2+ / 0-)
              Recommended by:
              musiccitymollie, splashy

              ...thinking "safety net" and start building strong, modern, sufficient, and sustainable federal social solutions decoupled from (adversarial) employers and jobs. The old model is gone - not not working but gone, kaput, already obsolete, and a replacement must be established to compliment our post-union, globalized nation.

        •  Well, yes and no... (0+ / 0-)

          iMO the bulk of the work life for the bulk of the Boomers in corporate, academic, manufacturing, and public service jobs offered pensions through the mid-90's. I agree that with time these offerings diminished but they were there. All of my employers offered pensions and still do today for new hires. Indeed, dividends and bond yields and interest rates have been so incredibly low for a very long time. There've been incredibly large waves of lay offs that have not been seen by today's workers. But, Boomers who have prioritized saving and prioritized pensions, managed modest lives, especially metro residents in commuting distance to the largest pools of jobs, have had options that have been diminishing in their later years but they've been there and now are largely gone. Boomers with these options, these priorities, especially those with no or few children, and who never suffered the grave financial setbacks of divorce or un/under-insured health crises, have ridden the last wave of planned retirement.

          •  Thanks for your comment, but my experience has (0+ / 0-)

            been that "defined benefit" pensions have been on the wane for decades.

            I'm fortunate that I will draw a federal retirement under a defined benefit plan, which was phased out in the mid-80s.

            (I was able to "grandfather" my CSRS retirement plan. Apparently, what replaced it was some sort of hybrid plan--maybe slightly better than a 401K, but not by much, from what I'm told.)

            Actually, the generation that had the best retirement plans were MY parents' generation.

            Literally both our Dads retired not only with excellent defined benefit pensions, but they both received the proverbial "gold watch."

            I can't even imagine that, LOL!

            Mollie

            "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


            hiddennplainsight--Relaunched 2014!

            by musiccitymollie on Sun Feb 02, 2014 at 01:26:35 AM PST

            [ Parent ]

      •  Boomers paid twice as much into SS (0+ / 0-)

        As their parents did, to cover their parents and themselves. That, in itself, slowed down their ability to save for retirement.

        That's why SS needs to be increased, since they paid so much into it.



        Women create the entire labor force.
        ---------------------------------------------
        Sympathy is the strongest instinct in human nature. - Charles Darwin

        by splashy on Sun Feb 02, 2014 at 08:28:47 AM PST

        [ Parent ]

    •  It's a step towards killing off Social Security (15+ / 0-)

      to replace it with a quasi-privatized plan.

      It would be incredibly easy to improve Social Security, a system that works, that is fair and secure.  Let's do that instead of creating some DLC/ThirdWay/Blue Dog privatization scheme.

      Money is property, not speech. Overturn Citizens United.

      by Betty Pinson on Sat Feb 01, 2014 at 02:12:20 PM PST

      [ Parent ]

  •  So instead of the financial sector getting to play (15+ / 0-)

    with your money early, they get to play with it after it's worth something. So $15k is the magic number we are all supposed to retire on according to this article where we are able to get a guaranteed return? So basically any retirement account worth retiring on is subject to the whims of the gamblers. Great.

    •  No. (4+ / 0-)
      $15k is the magic number we are all supposed to retire on
      and you know that is not what we are supposed to retire on.  The plan has lots of holes and problems, but there is no need to misrepresent what is proposed to point out its shortcomings.

      In my view it looks a lot like ObamaCare - a flawed but better than what exists program that hopefully is a camel's nose in the tent to what is truly needed - which is a national pension program (e.g., expanded Social Security) that funds current workers' retirements out of a combination of their own contributions, their employer's contributions, and minimal support from general funds.  I think the latter point (where the funding for today's workers comes from a combination of their own and their employer's contributions) is key to get off of the "young workers subsidizing old retirees" trope that gets pulled out all the time to try to undermine SS.

      •  Social Security is just fine (8+ / 0-)

        Tweak it to improve it and let the gamblers use their IRA's and 401K's to mess around in the stock market.

        Money is property, not speech. Overturn Citizens United.

        by Betty Pinson on Sat Feb 01, 2014 at 02:14:05 PM PST

        [ Parent ]

        •  If we have a reprise of 2008, (2+ / 0-)
          Recommended by:
          thanatokephaloides, dfarrah

          people's $15,001 in their IRAs will be worth something less than $7,500 - do they get their losses back somehow or is their $7,500 gone and they're still stuck with the fees?

          MyRA sounds like a ridiculous plan and it sounds like a scam.  Great news for the "anti-government, I don't trust the feds with MY money" crowd.

          Everyone who has any sense should take a look at what happened to Social Security payments in the aftermath of the crash versus what happened to people's retirement savings that were invested in the market.  Social Security stayed steady and retirement funds lost huge value and while they are coming back, I can say that based on what I've seen, they aren't coming back gang busters the way that the stock market has.

          •  They shouldn't be gambling living expense (1+ / 0-)
            Recommended by:
            inclusiveheart

            or pension funds in the market.  That sale of that plan was the biggest lot of hogwash I've ever seen.  It was foisted on people who knew nothing about how to invest for pension purposes.  They were convinced that the market makes the best money so it was the only thing they could see.

            You use different financial tools for different purposes and playing the market is the LAST thing you do.  The  first thing you do is establish stability so when the shit hits the fan, you're not left reeling.

            Newt 2012. Sociopath, adulterer, hypocrite, Republican.

            by tikkun on Sat Feb 01, 2014 at 04:14:23 PM PST

            [ Parent ]

      •  Unfortunately, (5+ / 0-)

        employer contributions aren't mentioned in connection with myRA.  The onus is strictly on the worker to fund the account.  I see it as one more step in the direction of YOYO (you're on your own), because I can't imagine employers seeing it as a plan meant to augment one of their own.

        •  You're on your own anyway, if the shit hits the (0+ / 0-)

          fan, except for social security, and unless you've established more stable tools for hard time.  I thought we'd figured that out.

          Newt 2012. Sociopath, adulterer, hypocrite, Republican.

          by tikkun on Sat Feb 01, 2014 at 04:15:53 PM PST

          [ Parent ]

    •  Yea, with the cap, and the fact one can (6+ / 0-)

      already put their IRA funds in government bonds, anyways...  I just don't see the point.

      •  ??? $25 startup, payroll deduct of $5 (minimum), (3+ / 0-)
        Recommended by:
        Chi, thanatokephaloides, tikkun

        no market risk (repeat market risk), no tax penalty for withdrawal.

        All sound like a great way for low income folks to get started WITHOUT the typical admin/mgmnt fees eating away at the growth.  No "cap."  

        Show me any low income/non-saver who would turn down the possibility to (slowly) grow a $15,000 nest egg in this near-painless fashion.

        What do you want?

        "But I do apologize, JVolvo, for you are arbiter of all that can and cannot be discussed and I bow down to your supremacy when it comes to what can be written on this website." WinSmith 1/22/2014 - "OK" JVolvo 1/23/2014 (sorry, Clive)

        by JVolvo on Sat Feb 01, 2014 at 01:20:59 PM PST

        [ Parent ]

        •  I missed the no tax penalty for withdrawal... (3+ / 0-)
          Recommended by:
          WillR, jbsoul, JVolvo

          But one could certainly buy treasuries or the like with an IRA as well.

          In general, I think having lots of discrete types of retirement accounts with different regulatory properties is a bad idea (IRAs, 401ks, Roth IRAs, Roth 401ks, MyIRAs, SomeoneElsesIRAs...)

        •  Please, where have you read that there are no (1+ / 0-)
          Recommended by:
          JVolvo

          fees?  Do you have a link, by any chance?

          Mollie

          "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


          hiddennplainsight

          by musiccitymollie on Sat Feb 01, 2014 at 02:04:16 PM PST

          [ Parent ]

          •  I'm just going off Joan's recap: It's for folks (2+ / 0-)
            Recommended by:
            tikkun, musiccitymollie
            whose employers don't offer traditional defined-contribution plans like 401(k)s would be able to invest in the portable account—it can be taken from employer to employer.

            Investment is through payroll deductions of as little as $5 a paycheck, after an initial $25 investment.
            The money goes into a government-backed bond pegged to the Government Securities Investment Fund offered to federal employees through the government's Thrift Savings Plan, a retirement program. That's a low-risk, low-return fund that last year yielded 1.47 percent and has averaged 2.24 percent over the last three years. It tends to hover right around the rate of inflation, so the returns aren't going to be great.
            But these bonds are protected from losing face value, and won't be subject to market losses, so the account balance cannot go down.
            There are no tax penalties for withdrawals from the fund.

            "But I do apologize, JVolvo, for you are arbiter of all that can and cannot be discussed and I bow down to your supremacy when it comes to what can be written on this website." WinSmith 1/22/2014 - "OK" JVolvo 1/23/2014 (sorry, Clive)

            by JVolvo on Sat Feb 01, 2014 at 02:37:15 PM PST

            [ Parent ]

            •  But $15,000 buys you nothing in terms (3+ / 0-)

              of real retirement security.  And over that mark, you're into fees and at risk in the market.  I think it sounds useless unless you are sophisticated enough to keep it at the top end and never allow it to go above $15,000, but that's not how the kind of person you're thinking needs this is going to manage the fund.  Actually, come to think of it based on the folks that I know who are living on the kinds of jobs that they are supposedly targeting, most of them don't even have a computer or a bank account.  How are they going to "manage" their funds?  They lack infrastructure and also often basic math skills.

              Shaking head.

              •  How long does it take to save $15M at $5/wk? (1+ / 0-)
                Recommended by:
                musiccitymollie

                I'm guessing, at 1-2%/yr interest maybe 40-45 years?

                Is this tax deferred?  Not that it would make much of a difference to the poor but, once it's rolled over to the banks and then w/drawn it may be taxed.

                "I freed a thousand slaves, I could have freed a thousand more if only they knew they were slaves" Harriet Tubman

                by BrianParker14 on Sat Feb 01, 2014 at 09:51:44 PM PST

                [ Parent ]

                •  $5 week MINIMUM. This isn't directed at middle- (0+ / 0-)

                  income folks.  It is explicitly for folks with no employer 401(k).

                  It's a doorway into savings for folks at the bleeping bottom of our economic system.

                  I'm ok with that.

                  "But I do apologize, JVolvo, for you are arbiter of all that can and cannot be discussed and I bow down to your supremacy when it comes to what can be written on this website." WinSmith 1/22/2014 - "OK" JVolvo 1/23/2014 (sorry, Clive)

                  by JVolvo on Sun Feb 02, 2014 at 01:43:50 PM PST

                  [ Parent ]

        •  Amend IRA regulations (9+ / 0-)

          to allow for the same thing.  

          The only reason they're creating this new "plan" is to have an excuse to kill off Social Security.

          Money is property, not speech. Overturn Citizens United.

          by Betty Pinson on Sat Feb 01, 2014 at 02:15:28 PM PST

          [ Parent ]

        •  I agree, JVolvo (1+ / 0-)
          Recommended by:
          JVolvo

          Newt 2012. Sociopath, adulterer, hypocrite, Republican.

          by tikkun on Sat Feb 01, 2014 at 04:16:33 PM PST

          [ Parent ]

        •  Slowly..........$5/wk X 60yrs = approx $15M (1+ / 0-)
          Recommended by:
          denise b

          not counting the approx 1% interest.
          So then the billionaires can have at it.

          Show me any low income/non-saver who would turn down the possibility to (slowly) grow a $15,000 nest egg in this near-painless fashion.
          Turn down the possibility of giving up five dollars a week for a return of a half a penny a week?

          How many poor can do w/o five dollars a week for an annual return of twenty-five cents. That's reality.

          Wonder what paperwork will be involved and how accessible it will be ( one week, two etc.) all for 1%.

          One dollar invested today at 1% annual return will be about one dollar and fifty cents in about thirty years.

          Inflation kills that every week! Food and energy go up more than that regularly.

          This is a gateway into destroying SS.

          "I freed a thousand slaves, I could have freed a thousand more if only they knew they were slaves" Harriet Tubman

          by BrianParker14 on Sat Feb 01, 2014 at 09:47:05 PM PST

          [ Parent ]

          •  $15M as in Million? ? ? ? (0+ / 0-)

            "But I do apologize, JVolvo, for you are arbiter of all that can and cannot be discussed and I bow down to your supremacy when it comes to what can be written on this website." WinSmith 1/22/2014 - "OK" JVolvo 1/23/2014 (sorry, Clive)

            by JVolvo on Sun Feb 02, 2014 at 01:44:47 PM PST

            [ Parent ]

      •  Actually, I believe the point is to "condition" (1+ / 0-)
        Recommended by:
        thanatokephaloides

        Americans for when Senator Harkin's major 'opt-out only' federal retirement plan comes down the pike.

        I'll try to drop back by with a link to this proposed retirement program [which I've posted on numerous occasions, already].

        Mollie

        "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


        hiddennplainsight--Relaunched 2014!

        by musiccitymollie on Sat Feb 01, 2014 at 02:50:32 PM PST

        [ Parent ]

      •  The point -- it's another giveaway to the (2+ / 0-)
        Recommended by:
        Losty, jbsoul

        financial industry!

        Just ask any of my relatives who are insurance and securities brokers and financial planners.

        This "program" is small potatoes compared to Senator Harkin's proposed 'opt out only' federal retirement plan.

        I'll be posting a couple of videos shortly, in which he describes his plan.

        My concern is not so much that the plan is made available to willing participants, but that it may become "mandatory."

        And there is already discussion in some quarters of mandating "unemployment insurance" [replacing our current system], and even mandating "long term care" insurance to replace the system of "spending-down" [in order to receive SNF care under Medicaid].

        A Commission was appointed by the Administration to examine ways to 'deal with' the long term care needs of Americans [outside of government programs].  They were initially supposed to issue a report in September of 2013.  But I have yet to find anything on the outcome of the Commission or its recommendations.

        BTW, the $15,000 figure has nothing to do with the client who signs up for this program--it is aimed at not forcing fund managers/plan administrators to 'messing with' small pools of savings. ;-)

        Mollie

        "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


        hiddennplainsight--Relaunched 2014!

        by musiccitymollie on Sat Feb 01, 2014 at 04:48:03 PM PST

        [ Parent ]

  •  Bonds cannot lose principal? (4+ / 0-)

    That's only true if you hold the bonds until maturity. (There are ways to arrange this.)  If you sell early and interest rates have gone up or down in the mean time, the price of the bonds may not match their face value.  One solution is to invest in short term notes, and treat the account like a CD: not available early.

    For most Americans, there appears to be better advice: Live below your means.  Do you know anyone who earns 15% less than you do?  Is she starving?  Are her children running unclad in the streets?  That person is living on less than your means, so you can do the same, and save the rest.  Thrift is a virtue, like not eating too much.

    Restore the Fourth! Save America!

    by phillies on Sat Feb 01, 2014 at 12:13:27 PM PST

    •  P.O.V. (1+ / 0-)
      Recommended by:
      corvo

      "The 'Middle' is a crowded place - that is where the effective power is - the extreme right and left might annoy governments, but the middle terrifies them." Johnny Linehan

      by northsylvania on Sat Feb 01, 2014 at 01:00:01 PM PST

      [ Parent ]

    •  ??? The program doesn't put actual bonds in the (2+ / 0-)
      Recommended by:
      thanatokephaloides, tikkun

      peoples hands.   ???  Therefore the savers wouldn't be selling a bond, they would be withdrawing their contribution.

      The money goes into a government-backed bond pegged to the Government Securities Investment Fund offered to federal employees through the government's Thrift Savings Plan, a retirement program.

      "But I do apologize, JVolvo, for you are arbiter of all that can and cannot be discussed and I bow down to your supremacy when it comes to what can be written on this website." WinSmith 1/22/2014 - "OK" JVolvo 1/23/2014 (sorry, Clive)

      by JVolvo on Sat Feb 01, 2014 at 01:25:15 PM PST

      [ Parent ]

    •  Ah, yes, good ol' Personal Responsibility. (1+ / 0-)
      Recommended by:
      jbsoul

      Too bad that approach simply does not work.

      To put the torture behind us is, inevitably, to put it in front of us.

      by UntimelyRippd on Sat Feb 01, 2014 at 02:39:42 PM PST

      [ Parent ]

      •  It has worked for people. (1+ / 0-)
        Recommended by:
        AlexDrew

        It doesn't work well for people who don't have the discipline to do it.  Small business owners have been doing this for years because they really had no alternative.

        Newt 2012. Sociopath, adulterer, hypocrite, Republican.

        by tikkun on Sat Feb 01, 2014 at 04:20:23 PM PST

        [ Parent ]

        •  It doesn't work for *societies*. (0+ / 0-)

          I am not down with the idea that the solution to social problems can be found in a combination of moral pressure, condescension, and unconcern for the fate of those who fail to exhibit a psychology that is not prevalent in our species.

          To put the torture behind us is, inevitably, to put it in front of us.

          by UntimelyRippd on Sat Feb 01, 2014 at 09:57:22 PM PST

          [ Parent ]

    •  phillies: (5+ / 0-)

      You are dead wrong and your advice is almost cruel to "most Americans".  Telling the majority of the Americans I know to "live below their means" when they are already struggling is beyond clueless and cruel.

      In addition, saving 15% of the average income for 30 years and miraculously never having to dig into it for car repairs,  home repairs,  medical expenses,  etc,  will still never get an average earner anywhere near what he will need in retirement. Because as McJoan says, they simply don't get paid anywhere near enough.

      It's such a laughable and ridiculous meme. The tired elitist trope of "you people just need to save more and stop blowing your money" is a dodge. Yet another smug way to blame underpaid, overworked people for not pulling themselves up by their own frayed and broken made-in-China bootstraps.

      •  phillies, that may be true for most people (0+ / 0-)

        but it's not true for all people.  Please don't speak for all of us. Some of us have done it successfully and you just managed to insult us for our efforts.

        Newt 2012. Sociopath, adulterer, hypocrite, Republican.

        by tikkun on Sat Feb 01, 2014 at 04:23:00 PM PST

        [ Parent ]

        •  Nobody's insulting (1+ / 0-)
          Recommended by:
          jbsoul

          the people who can do it. But the question is whether we can expect everyone to do it. Clearly, we can't.

        •  I don't think the statement was personal. (1+ / 0-)
          Recommended by:
          jbsoul

          Think if it this way:

          You have worked hard, been relatively successful and managed to build a business that provides you with adequate income to support your lifestyle and to put some money away for your future.  

          Not everyone can do that.

          Stating that isn't a personal attack on you or anyone else who's managed to do what you've done.  It's simply stating that your reality isn't everyones reality.

          Many people in this nation, no matter how hard they work, will simply never make a reasonable income in this nation - not under todays economic conditions.  And it isn't as simple as "just go get a degree and better yourself", because more than 50% of the jobs in this nation are unskilled labor jobs, so even if everyone took that advice, there simply is not enough need for people with higher level skills and education in the workforce to employ everybody.  Many of them would still end up being proverbial ditch diggers regardless.  So simply expecting everyone to "better themselves" is not a viable or plausible solution.  The solution to this first part is in Americans, as a society, acknowledging that even low skilled jobs have to have a minimum value that allows for someone working such a job full time to adequately support themselves andsave for retirement.

          Secondly, even if you are able to accomplish the first part, our current system of providing for retirement is fatally flawed.  Again, you have been able to successfully navigate it.  That's great.  However, there is a huge number of people out there that are and always will be very unsophisticated investors when it comes to retirement savings and therefore will not be able to get money saved for retirement to grow an an appropriate rate if at all.  Even and especially with the so-called "help" of investment advisers who at the end of the day don't give a shit if the client made money, because they still got their annual management fees anyway.

          That's not a personal dig on you, or anyone like you.  It's simply pointing out reality that not everyone is like you.  In a society, we have to acknowledge that not everyone is as smart, brilliant, skilled, or just plain lucky as everyone else, and construct the society so the lowest amongst us can still not only survive, but thrive.  That's what a society is all about.  Again, that doesn't reflect negatively upon you.  The only people such viewpoints reflect negatively upon are those with uncaring "I got mine now screw you" type attitudes that think "Fuck everyone else.  I don't care as long as I'm OK." - and I doubt you're one of those people if you're here on DK.

          •  Darth Stateworker (0+ / 0-)

            I know everyone can't do it which is one of the reasons why I'm here.  I also know that people who are just learning about managing their money, have been given a whole lot of bull by most, so called, investment counsellors. Some of us do know how it's done because we've been taught by people who survived real panic (the depression) relatively intact by using tools that were/are conservative, uninteresting and steady.  in our conversations about money, it's uses, and abuses, I think its important to recognize that those tools are still around.  They are an important part of the arsenal that includes social security, dedicated pensions, and modest frugality.

            Newt 2012. Sociopath, adulterer, hypocrite, Republican.

            by tikkun on Mon Feb 03, 2014 at 10:41:11 AM PST

            [ Parent ]

      •  live below your means? (2+ / 0-)
        Recommended by:
        jbsoul, Darth Stateworker
        You are dead wrong and your advice is almost cruel to "most Americans".
        "Almost cruel" is too weak. A straight "cruel" is called for here. (Needless to say, I support your point here.)

        When phillies said:

        For most Americans, there appears to be better advice: Live below your means.  Do you know anyone who earns 15% less than you do?  Is she starving?  Are her children running unclad in the streets?  That person is living on less than your means, so you can do the same, and save the rest.
        what was being advocated is: neglect your responsibilities so you can accumulate money. That's not "almost" cruelty, it is cruelty, pure and simple.

        (Not to mention the fact that the exact act being described, material neglect of one's children, is a crime in every one of the United States, and will result in one losing all that wonderful money one saved up to the State by doing so. The State can, will, and should do this.)

        In addition, saving 15% of the average income for 30 years and miraculously never having to dig into it for car repairs,  home repairs,  medical expenses,  etc,  will still never get an average earner anywhere near what he will need in retirement. Because as McJoan says, they simply don't get paid anywhere near enough.
        I call this "elitist selective math ignorance". The fact that one must accumulate dollars at a certain minimum rate in order to get in to the capitalist game in any meaningful way at all seems to evade these dweebs altogether. For a good many Americans, accomplishment of any of the traditional goals of saving -- whether it be retirement, home ownership, or college for either self or children -- requires a dollar rate of savings which clearly exceeds their income. Let's face it: if you have less than $100,000 in net liquid worth, you're not getting access to anything genuinely profitable. It's go big or go home.
        The tired elitist trope of "you people just need to save more and stop blowing your money" is a dodge. Yet another smug way to blame underpaid, overworked people for not pulling themselves up by their own frayed and broken made-in-China bootstraps.
        Spot on! It's high time (and then some) that we put an end to the exceptionalistic nonsense floating around in our culture and face the fact that either the economy works for all, or it doesn't work AT all.

        Anarchism is anti-capitalist, and advocates egalitarianism, mutual aid, and reciprocity, and goes back centuries. -- DailyKos User ZhenRen

        by thanatokephaloides on Sat Feb 01, 2014 at 04:37:08 PM PST

        [ Parent ]

        •  thanatokephaloides: (1+ / 0-)
          Recommended by:
          thanatokephaloides

          Well said!

          And you're right about the "almost cruel". I can be a weenie, raised to be too nice so even when I'm really offended by something I often soften and hedge. After I hit post I read it and regretted my weasel wording lol!

          Thank you for totally nailing it!

          •  wording (1+ / 0-)
            Recommended by:
            jbsoul
            And you're right about the "almost cruel". I can be a weenie, raised to be too nice so even when I'm really offended by something I often soften and hedge.
            I, too, resemble that remark!  :-)

            Anarchism is anti-capitalist, and advocates egalitarianism, mutual aid, and reciprocity, and goes back centuries. -- DailyKos User ZhenRen

            by thanatokephaloides on Sat Feb 01, 2014 at 05:12:30 PM PST

            [ Parent ]

        •  This quote (2+ / 0-)
          Recommended by:
          thanatokephaloides, jbsoul

          should be repeated over and over again by every liberal politician everywhere in the nation:

          It's high time (and then some) that we put an end to the exceptionalistic nonsense floating around in our culture and face the fact that either the economy works for all, or it doesn't work AT all.
          Awesome!
          •  my quote (1+ / 0-)
            Recommended by:
            jbsoul
            This quote should be repeated over and over again by every liberal politician everywhere in the nation:

                It's high time (and then some) that we put an end to the exceptionalistic nonsense floating around in our culture and face the fact that either the economy works for all, or it doesn't work AT all.

            Awesome!

            Wow, thank you!!  :-)

            (And yes, that's mine!)

            Anarchism is anti-capitalist, and advocates egalitarianism, mutual aid, and reciprocity, and goes back centuries. -- DailyKos User ZhenRen

            by thanatokephaloides on Sun Feb 02, 2014 at 02:36:28 AM PST

            [ Parent ]

  •  as long as the fed is venturing into... (17+ / 0-)

    personal finance, a much needed help for the low income individual would be to have banking services offered by the USPS. give the financial predictors of the poor ie; check cashing, pay as you debit cards etc, some competition and let the USPS provide those services. this would be a great use of executive order

  •  Anything tied to the corrupt financial oligarchy (8+ / 0-)

    and further chains the public to it is a bad idea.  

    "Fragmented and confused, we have no plan to combat any of this, but are looking to be saved by the very architects of our ruination."

    by BigAlinWashSt on Sat Feb 01, 2014 at 12:16:23 PM PST

  •  This is prima facia (1+ / 0-)
    Recommended by:
    joe from Lowell

    socialism

    -7.5 -7.28, A carrot is as close as a rabbit gets to a diamond.-Don Van Vliet

    by Blueslide on Sat Feb 01, 2014 at 12:16:40 PM PST

  •  I've had a self directed IRA (7+ / 0-)

    for more than 10 years. Being self employed with no pension or 401k, it has served me well. Yes, I pay fees, but I control the investments.

    The important thing is to have a wide range of investment opportunities for workers to choose from.  Everyone's situation is different; choices are good. And of course it's important to safeguard the accounts against predators.

    Whichever investment vehicle is chosen, it should be a supplement to Social Security, not an excuse for cutting benefits.

  •  15k is stoopid (1+ / 0-)
    Recommended by:
    corvo

    I can save that in a year or less. Then what? I'm no longer using employer 401K because those account managers don't give a flip about anyone but the company. Most folks don't realize that the employer has the option to opt out of their contribution at the end of the year. And if the employee loses half their money well, then, who gives a shit?

    Maybe all these folks with their 15K, instead of giving it to Dimon, should form a consortium to buy a politician or two....

    Knock twice, rap with your cane

    by plok on Sat Feb 01, 2014 at 12:21:39 PM PST

    •  Then for some of us, it would take us 10 yrs or (3+ / 0-)

      more to save that much money.  We would be lucky to save 1000 per year and that is optimistic.

      Keystone Liberals on Twitter @ KeystoneLibs , Join PA Liberals at http://keystoneliberalsforum.aimoo.com/

      by wishingwell on Sat Feb 01, 2014 at 12:28:20 PM PST

      [ Parent ]

    •  It's not for you. You're all set. (3+ / 0-)

      It's a plan for people far below you on the income scale.

      Art is the handmaid of human good.

      by joe from Lowell on Sat Feb 01, 2014 at 12:37:27 PM PST

      [ Parent ]

      •  There are so many people who don't own a savings (4+ / 0-)

        accounts. Many simply believe they wouldn't be able to contribute to it, so their attitude is why bother? This is an easy way to start that account. It is after all called "a starter savings account" and for people who are on the lower end of the income bracket it will be an incentive.

        There are no fees and contributions could be as low as $5. And for those on the lower end of the income bracket, who would never even consider what to them could be a daunting task of walking into a bank to open such an account, the account being offered through payroll deductions is stressless.

        •  Opening a savings account (4+ / 0-)

          is for most people objectively foolish behavior.  Interest rates are well below even the official inflation rates.  Government and Wall Street have finagled it so that the only way you can beat inflation on an investment is . . . to gamble and take your chances on Wall Street.

          Better to stock up on canned beans or something.  

          Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

          by corvo on Sat Feb 01, 2014 at 01:23:41 PM PST

          [ Parent ]

          •  Are you going to pay the value for those canned (2+ / 0-)
            Recommended by:
            tikkun, thanatokephaloides

            beans? Perhaps you can turn canned beans into a currency.

            I have no idea what stocking up on canned beans will do except to have one incur the expense of storage to house all those canned beans. Do you know how much it cost to store stuff these days?

            As for the President's plan, people will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan (TSP) Government Securities Investment Fund.

            •  People who can barely save $5 a month (2+ / 0-)
              Recommended by:
              dharmafarmer, jbsoul

              might as well buy canned food with it.  $5 won't even buy two cans of salmon any more.

              A year's worth of canned salmon at $60 per year barely fills a shopping bag, and with the forthcoming food stamp cuts probably won't be around for long anyway.

              With the same amount of money one can fill a photocopier paper box with canned beans.  O the humanity.  But you do have a point; as more people go homeless, where will they be able to stash their loot?  Oh yeah -- Wells Fargo.

              Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

              by corvo on Sat Feb 01, 2014 at 02:15:04 PM PST

              [ Parent ]

          •  Short term saving is absolutely (0+ / 0-)

            necessary. Saving for tax bills because the penalty for late payment far exceeds the loss in dollar value, for example. Obama says he want to get people in the habit of saving, even a small percent to develop the habit. I just wish the cap was higher than 15K. Withdrawing from the account without penalty is critical.

            Knock twice, rap with your cane

            by plok on Sat Feb 01, 2014 at 06:25:18 PM PST

            [ Parent ]

            •  Sure, it's absolutely necessary. (2+ / 0-)
              Recommended by:
              plok, wsexson

              Once you have a living wage and a social safety net to fall back on.

              First things first.

              Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

              by corvo on Sat Feb 01, 2014 at 07:03:32 PM PST

              [ Parent ]

              •  If you can't get your living wage then (0+ / 0-)

                you're in the unfortunate position of having to share space. I've been there. All my family members have been there. In those days it was a matter of never spending my last dollar. I always had that single dollar in my wallet because to have zero introduces a new level of depression. Keeping that one dollar was a form of saving. It's all relative.

                Knock twice, rap with your cane

                by plok on Sat Feb 01, 2014 at 07:11:38 PM PST

                [ Parent ]

                •  well, that's fine and dandy (0+ / 0-)

                  if your tax bill -- your example -- is less than $1.

                  Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

                  by corvo on Sat Feb 01, 2014 at 07:23:18 PM PST

                  [ Parent ]

                  •  We're talking about two different things (0+ / 0-)

                    This thread is about Obama's savings plan. I won't deny there is unjust poverty in America. I think it's a crime. Let's leave it at that. Best of luck to you.

                    Knock twice, rap with your cane

                    by plok on Sat Feb 01, 2014 at 07:26:38 PM PST

                    [ Parent ]

        •  I'm still trying to get the details of this plan, (6+ / 0-)

          however, Jon Walker at FDL makes a couple of good points in his diary "What Is the Real Point of MyRA?"

          There are also some more cynical interruptions about what the MyRA is really about. For starters, the design is a real gift to big fund managers because the program bizarrely requires you to roll over into a private Roth IRA once you hit $15,000. The cap makes no policy sense. People who are using the MyRA instead of traditional IRAs are likely to be individuals who are not the best at finance. They could become prime targets for unscrupulous funds once they hit their limit.

          The MyRA also adds to the great risk-shifting taking place by continuing to promote “individual responsibility” instead of social insurance. Obama is not even making aspirational calls for an expansion of Social Security or private defined benefits plans. He is creating one individual savings plan while asking Congress to pass what he thinks would be a better individual savings proposal. Obama is only focused on marginally improving individual saving plans that politically prop up a bad idea which feeds a terrible trend. The real retirement problem in America has been shifting responsibility to individuals, not how the saving plans have been designed.

          Anything short of a 'defined-benefit' plan is no different than saying "you're on your own," IMHO.

          Mollie

          "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


          hiddennplainsight

          by musiccitymollie on Sat Feb 01, 2014 at 02:29:15 PM PST

          [ Parent ]

    •  A HUGE swath of working poor/low income folks (3+ / 0-)
      Recommended by:
      tikkun, thanatokephaloides, plok

      don't have $15K extra/year to stash away.  Jeebus, man.

      Since you can, this program isn't designed to help you.  Can you stomach the idea that it could help millions?

      "But I do apologize, JVolvo, for you are arbiter of all that can and cannot be discussed and I bow down to your supremacy when it comes to what can be written on this website." WinSmith 1/22/2014 - "OK" JVolvo 1/23/2014 (sorry, Clive)

      by JVolvo on Sat Feb 01, 2014 at 01:32:39 PM PST

      [ Parent ]

  •  There are excellent retirement managers (7+ / 0-)

    There are a great many "investment councilors" that make a lot of money investing "our" money.  But, there are also some very excellent retirement managers all around the country that help people invest for retirement without charging enormous fees and make their money on volume rather than high fees.  

    It is up to the investor to find them, though.  It will take some savvy and some research, but they are out there and there are far more than most people think.  

    Mine has been with me for eons and he has even told me to take some of the money he manages and put it elsewhere.  He is that good and that honest and that good a business person.  As a result, he is hard to get for new investors.  His reputation is so good and so many of those that he services have recommended him, he has had to add staff.  Do you have an investment guy call you close to monthly to just ask how you are doing and if you have any questions about your money?  

    So, this MyRA thing is good if people make the correct decisions.

  •  MyRA doesn't hurt (5+ / 0-)

    but it also won't even make a splash on the retirement crisis.

    None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

    by gjohnsit on Sat Feb 01, 2014 at 12:26:50 PM PST

  •  I think it's a perfectly crappy idea. (13+ / 0-)

    What's wrong with improving Social Security -- as opposed to his repeatedly expressed desire to take a whack at it?

    Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

    by corvo on Sat Feb 01, 2014 at 12:28:33 PM PST

  •  Shorter MyRA idea: (14+ / 0-)

    "Cartoon band-aid on a gushing severed artery."

    /return to snarkless comments

    Seriously ... About the only thing that would force politicians to deal with the urgency of actual people's problems would be to stop letting anyone above median income run for office.

    And before anyone says "well what about JFK or FDR?" I'll offer the data point that there have been at least 1000 kleptocrats elected per rich person who actually might give a shit about poor people. That's a risk I'm increasingly willing to take.

    •  FDR was more or less forced to be FDR (3+ / 0-)
      Recommended by:
      cocinero, JVolvo, chrississippi

      for the first few years of his administrations; he gave that act up in 1937.

      JFK was vastly preferable to Nixon but also vastly overrated.

      Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

      by corvo on Sat Feb 01, 2014 at 12:41:26 PM PST

      [ Parent ]

    •  It's Not the Wealth of the Office Holder (5+ / 0-)

      It's the number of offshore yachts per year they need to raise in funds to hold onto the job. It's not their rich friends they're pandering too, it's their funders. Rich or poor they still face the same problem.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Sat Feb 01, 2014 at 12:58:53 PM PST

      [ Parent ]

    •  the urgency of actual people's problems (2+ / 0-)
      Recommended by:
      chrississippi, jbsoul
      Seriously ... About the only thing that would force politicians to deal with the urgency of actual people's problems would be to stop letting anyone above median income run for office.
      At least until the representation by those whose regular livelihoods come from hourly wages constitute enough of a majority in the Federal and all State Legislatures to over-ride any executive vetoes.

      And all such representatives/senators should be exempt from term limits as well.

      Anarchism is anti-capitalist, and advocates egalitarianism, mutual aid, and reciprocity, and goes back centuries. -- DailyKos User ZhenRen

      by thanatokephaloides on Sat Feb 01, 2014 at 05:24:16 PM PST

      [ Parent ]

  •  The entire financial services industry is the prob (8+ / 0-)

    The entire financial services industry is the problem.

    1) Things that used to be paper-heavy and labor intensive that are now automated due to computers, etc have never been discounted - so if it legitimately took a certain amount to process a trade in 1970, that amount has really not been discounted, despite the increase in volume.

    2) Most of the companies are crooks.  discuss.

  •  Yes, improve Social Security, (7+ / 0-)

    but even with improvement, there is no such thing as actual retirement for some people.
    Many of us will work till we cannot possibly work anymore. Fact of life.

    "He went to Harvard, not Hogwarts." ~Wanda Sykes
    Teh Twitterz, I'z awn dem.
    Blessinz of teh Ceiling Cat be apwn yu, srsly.

    by OleHippieChick on Sat Feb 01, 2014 at 12:56:09 PM PST

  •  Vanguard (5+ / 0-)
    Recommended by:
    JVolvo, Chi, Minnesota Mike, jbsoul, tikkun

    There are some good options other than paying high fees to Wall Street firms.

    The saver could roll over his/her$15,000 into a Vanguard Admiral index fund IRA that has an expense ratio of 0.05%.  The VTSMX fund (indexes the entire stock market) returned 33% last year. Not many money manager can beat this.

    The opposite of "good" is "good intention" - Kurt Tucholsky

    by DowneastDem on Sat Feb 01, 2014 at 01:15:57 PM PST

    •  True. If you HAVE to gamble on Wall Street (5+ / 0-)
      Recommended by:
      JVolvo, Chi, jbsoul, tikkun, thanatokephaloides

      one ought to at least cut out the middlemen, most of whom have appallingly bad success records compared to the behavior of virtually unmanaged index funds.

      Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

      by corvo on Sat Feb 01, 2014 at 01:24:49 PM PST

      [ Parent ]

  •  The reason people do not save (6+ / 0-)

    is that they do not have any extra money at the end of the month, or even at the beginning of it.

    I worked with some small IRAs back when the tax firm I worked for offered them (you could direct part of your tax refund into it, not a bad idea). Almost everyone pulled the money out as soon as they were allowed to, because they needed it to pay bills.

    The only advantage of this scheme over traditional US savings bonds is that the income is not taxed. But really, if you're putting $10 a week in -- more than most workers can afford -- that's $520 a year, so the 1.5% return is what, maybe $8 a year? And the tax on that would be, for low-middle-income people, maybe $1.50?

    It's a complicated set-up, and extra administrative costs for someone -- government? employer? -- for a teensy benefit.

    And there is already a comparable option: Open an IRA through a credit union, and have it automatically funded every payday.

    Please, Mr. President, we don't need this kind of complicated tinkering. Take the money and just give people a raise in their Social Security benefit instead.

  •  Rounding error proposal (6+ / 0-)

    Mr. Clinton, I'm sorry I denigrated your proposals for school uniforms.  They weren't a good idea, but I needed something to say at the SOTU, and now I see why you came up with such ideas. Last year I aimed high and got nowhere.  This year I'm following your lead, aiming low, and will be able to claim victory in ways that will take an electron microscope to detect.  Thanks again for your leadership, and all the best to Hillary.
    Love,
    Barack

  •  A typically inadequate response by a man (6+ / 0-)

    who is turning out to be a non substantive President.

  •  Bleargh. I was at least ok with it until the part (6+ / 0-)

    about hitting 15k and letting the finance vultures in on the action.

    But as you note in the second to last paragraph, beefing up SS would be a far better idea.

  •  Ultimately, any retirement savings plans that (1+ / 0-)
    Recommended by:
    thanatokephaloides

    are non-compulsory are going to be ineffective at preventing poverty in the elderly.

    The nature of supply and demand dictates that people at almost every socioeconomic level will spend almost all of their income on the "necessities" of life at that level. Particularly among the poorest levels, the cost of subsistence will rise to consume 100% (or more) of income.

    If you require people to save 7% of their income, then they cannot choose to pay higher prices for necessities, rather than save.

    This, ultimately, is why certain goods and services should be provided by government agency: To free ordinary people from the tyranny of the market. Apply a flat 10% income tax (earned and capital gains), and use the proceeds to fund universal healthcare. Apply another flat 15% income tax and use the proceeds to fund social security. Apply another flat 10% income tax and use the proceeds to fund universal free-to-attend post-secondary education. Apply a flat 5% income tax and use the proceeds to fund free-to-ride mass transportation. Etc.

    Why am I okay with flat taxes for these programs, when flat taxes are universally recognized as being effectively regressive? Simply because, the benefits of the taxes will be distributed progressively. Some CEO making 10 million dollars a year will be contributing 1 million dollars a year to the national health system. And 500,000 dollars a year to a transit system she will never ride (which is not to say she won't benefit, but it won't make a first-order difference to her bottom line).

    To put the torture behind us is, inevitably, to put it in front of us.

    by UntimelyRippd on Sat Feb 01, 2014 at 02:19:47 PM PST

    •  That adds up to 40% (1+ / 0-)
      Recommended by:
      thanatokephaloides

      I can't imagine someone earning $30K or so being able to pay 40% in taxes and still be able to support themselves, let alone a family.

      “It is the job of the artist to think outside the boundaries of permissible thought and dare say things that no one else will say."—Howard Zinn

      by musiclady on Sat Feb 01, 2014 at 02:51:54 PM PST

      [ Parent ]

      •  in SS, medicaid, income taxes (2+ / 0-)
        Recommended by:
        dharmafarmer, UntimelyRippd

        and healthcare you are paying that much now, at least I am, and we barely are making "middle class" with our 70k a year earnings.

        If you are not the lead dog, the view never changes.

        by RepresentUsPlease on Sat Feb 01, 2014 at 02:56:09 PM PST

        [ Parent ]

      •  Supply and demand, musiclady. (1+ / 0-)
        Recommended by:
        thanatokephaloides

        If someone earning 30K per year paid 40% in taxes, the price of everything else the family needs (housing, energy, food, clothing, etc.) would be lower.

        People just don't get this. The prices of things are not innate, they are not fundamental properties of the universe, but rather, they are derived properties of the available cash supply.

        Don't believe me? Well, check out the tax numbers for Canada or Denmark.

        To put the torture behind us is, inevitably, to put it in front of us.

        by UntimelyRippd on Sat Feb 01, 2014 at 03:13:55 PM PST

        [ Parent ]

        •  I don't see one's mortgage payment or rent (1+ / 0-)
          Recommended by:
          thanatokephaloides

          going down.  I understand that places like Canada and Denmark have higher taxes.  Are they flat tax rates though?  I just imagine someone barely scraping by now trying to deal with that kind of increase in taxes.  I don't see rent and food prices dropping.  My 30 year old daughter makes $20 - $25K and lives paycheck to paycheck.  She doesn't pay anywhere near 40% of her income in taxes (including health care which she doesn't have).

          I'm all for paying more taxes to fund universal health care, retirement and education.  I just think the taxes would still have to be progressive as opposed to flat.

          “It is the job of the artist to think outside the boundaries of permissible thought and dare say things that no one else will say."—Howard Zinn

          by musiclady on Sat Feb 01, 2014 at 03:58:46 PM PST

          [ Parent ]

          •  Any such changes would need to phase in (0+ / 0-)

            gradually -- like, over decades -- if you seriously wanted to implement such a scheme. As they phased in, property values would also gradually decline -- although in "normal" economic times, this would mean that they would stay fairly constant, rather than continually rising. You might not "see" food prices dropping, but food prices must drop if the money in people's pockets drops. There's no way out of that. What else could possibly happen?

            To put the torture behind us is, inevitably, to put it in front of us.

            by UntimelyRippd on Sat Feb 01, 2014 at 10:02:30 PM PST

            [ Parent ]

    •  this is the exact reason (1+ / 0-)
      Recommended by:
      thanatokephaloides

      I have always been in favor of a flat tax system of some kind.

      Why am I okay with flat taxes for these programs, when flat taxes are universally recognized as being effectively regressive? Simply because, the benefits of the taxes will be distributed progressively. Some CEO making 10 million dollars a year will be contributing 1 million dollars a year to the national health system. And 500,000 dollars a year to a transit system she will never ride (which is not to say she won't benefit, but it won't make a first-order difference to her bottom line).

      If you are not the lead dog, the view never changes.

      by RepresentUsPlease on Sat Feb 01, 2014 at 02:52:32 PM PST

      [ Parent ]

    •  I understand your idea (0+ / 0-)

      and I think it has merit, however due to the income inequality level we have today, those on the lowest rungs simply could not take such a taxation hit.  It would be far too regressive for them to handle - largely because, contrary to what you were saying above, I highly doubt the markets for housing and consumer goods would "correct" themselves.  

      And even on the off-chance that the markets did "correct themselves", it wouldn't be an overnight process - it could take years - leaving those with the lowest incomes in utter crisis.

      I don't trust in the "invisible hand" because time has shown again and again that it is largely... mythical - in very large part because greed overrules market forces in many cases, especially in todays US society where the foxes guard the henhouse by buying every practically politician in the nation.

      However, in theory I could see your idea working as written if income inequality was addressed and 100% public campaign financing where politicians could no longer receive any source of outside campaign funding at all or anything that even remotely appeared to be graft-like - because that's the only way to keep them from being beheld to deep-pocketed interests and focused on passing laws that meet the needs of their constitutions instead.  Neither of those things is going to happen any time soon, as such, such flat taxes are unworkable.

      Throw up the same idea with progressive tax rates instead, and you could implement such an idea tomorrow without disrupting most peoples lives too dramatically.  This doesn't even consider that the wealthy tend to get the largest benefit of having a civilized society, and as such, one could say they have a moral obligation to pay higher progressive tax rates towards said society, because that society is what allows them to have their success in the first place.  There was no such thing as a "wealthy" hunter-gatherer - organized society brought about the creation of the idea of "wealthy people."

      •  see my response to another comment. (0+ / 0-)

        yes, it would be brutally disruptive to try to implement such a plan in full, and in a single step. a phased approach might work.

        however, i don't have any ideological objection to progressive taxes -- quite the opposite, i generally believe in the necessity of confiscatory tax rates at the top levels. i just don't think they're necessary for funding these specific sorts of programs.

        To put the torture behind us is, inevitably, to put it in front of us.

        by UntimelyRippd on Sun Feb 02, 2014 at 08:57:18 AM PST

        [ Parent ]

  •  My issue with your proposal: (0+ / 0-)
    First and foremost, recognize the reality that Social Security isn't a supplement for most people any more, it's the majority of what they've got to live on. Expanding Social Security, making it more generous and making cost of living adjustments actually meet increasing costs of the things seniors spend most of their money on, is one good solution.
    This would require raising payroll taxes substantially. If you want to double or triple SS payouts, you couldn't fund this simply by lifting the contribution cap. You would hike the payroll tax for everyone.

    Speaking as a 25 year old, that is a great way to keep me from voting.

  •  MyRA is a step toward privatized Social Security (0+ / 0-)

    Setting up a program like MyRA is one of the steps in the "Leninist Strategy" to undermine and privatize Social Security.  This action reminds me of Obama's Payroll Tax Holiday, the true purpose of which was to undermine Social Security while masquerading as economic stimulus. This president is all about deception.

  •  What if you grow your MyIRA to $14,000 (1+ / 0-)
    Recommended by:
    Holmes

    then pull it into a regular savings account to keep it out of an IRA ROTH and then start another MyIRA?

    Wouldn’t you be able to save in a safe place and then place the money elsewhere without penalty?

    I would do that over and over and over again. (If legal)

  •  Um, question about income ranges (0+ / 0-)

    This may be the result of complicated sentence structure, but

    Low and middle income earners who make less than $191,000 a year
    Isn't this ALL of the "low and middle income earners"?

    I can promise you one thing: we're going to get to watch people who earn $191k+ talk about the "lucky duckies" who get to invest in the MyRA.

    Ugh. Ugh.

  •  This is no step forward. (1+ / 0-)
    Recommended by:
    kkkkate

    Fair warning:  for some, this might be a TL;DR comment.  

    Basically, it's an IRA with lower a lower start-up contribution and a new name.  Period.

    It is still putting your retirement money in the hands of Wall Streeters who's primary function is to separate you from as much of your money as possible - just like regular IRAs, just like 401ks, just like 457s, just like Roth IRAs...  Ad infinium.

    None of these retirement schemes puts any pressure to perform on Wall Street or individual fund managers or brokers.  They still get their cut, their vig regardless of how well the clients funds perform, and get to pass the blame to the client because "the client ultimately chose the investments."  Such schemes are fine for supplementary retirement savings as the third leg of a traditional "three legged stool" approach that consists of a traditional defined benefit pension, Social Security, and individual savings.  But none of them function effectively as a primary retirement vehicle.

    What we need to do in this nation is to push for the return of employer sponsored defined benefit pensions - for multiple reasons:

    1.  Firstly - the fund managers actually have some responsibility for performance.  In larger plans, the fund managers are internal employees of the pension trust fund itself, and if they don't perform, they're gone.  In smaller plans where the funds aren't large enough to have their own fund managers, the external managers hired to choose investments only generally (if a fund is set up correctly) get a cut of actual gains, and don't simply get an annual fee no matter how well or how poorly the investments they choose perform.  There is no guaranteed vig so the fund manager can pocket money no matter what.  They have to care about how the fund performs by default.

    2.  Secondly, pensions, due to their actuarial nature, spread the risk of funding retirement around a large group of employees.  It works in part similar to life insurance:  you know some folks won't collect at all, some won't collect for very long, some will collect for the average amount of time, and a small number will collect for longer than usual.  As such, the principal amount needed to fund a pension is less than the principal amount needed to fund an individual retirement scheme like an IRA or a 401k if both have the same assumed long-term ROI.

    3.  Thirdly, it forces employers to share in some of the risk.  I see this as a moral issue.  Some - chiefly conservative and libertarian types - that have the "I got mine now screw you" attitude amongst such types don't see or understand the moral reasoning involved in having such a social contract.  But screw those idiots.  Clearly, they were raised wrong and have shit for personal values and no understanding that in a society, you're all in it together - every person, every business has a stake in lifting society up as a whole and not simply looking at it from the Gekkoized "I want it all for MEEEE!!!!" perspective.  Additionally, businesses are not like people - they can exist in perpetuity, and as such, it makes sense to have them take a stake in their employees retirement needs.

    4.  Fourthly, employee retention.  Companies constantly complain about their revolving doors and training costs for bringing new employees on.  Pensions are not portable.  You can't take them from job to job.  As such, they provide an incentive for an employee to invest themselves in a job for the long term - and not just until a better opportunity arrives.  This is the reason why in previous generations, many workers would stay with a single company for an entire career and today, most don't - no pension to hold them there.

    5.  Fifthly, pensions are not - I repeat - NOT as expensive or "unsustainable" as the greedy-assed anti-pensioners would have one believe.  Simple math that anyone can do on an Excel spreadsheet proves this.  One can easily show how a pension that provides 60% of an employees working salary after 30 years of work can cost an employer 5% - 10% of an employees annual salary during their working lives if the pension plan is able to get a reasonable long term ROI of 7% - 10%.  The so-called "unsustainable" plans that "fail" mainly fail because the employer tends not to contribute the actuarially required amount, choosing instead to claim they are going to delay payment for a few years - only to then renege on putting the money in and claiming the plan is bankrupt.  Very few plans historically have had trouble bringing in the required annual returns over the long term provided they have decent fund managers managing the money, so while that is a potential pitfall, it is no where near as problematic as the employers not adequately funding the plan.  This is what you're seeing with most of the "failing" government plans around the nation.  Pols shirked their fiduciary duties and spent the money elsewhere, promising to pay it in later with interest - only when they bill came due, or the shortfall due to the chronic underfunding became far more apparent after the losses of the recession, they welched on paying it.  Bottom line - pensions have been around for a century and a half as a retirement vehicle, and basic math and that longevity reflects that they work if they are funded and managed correctly.

    6.  Wealth inequality.  Personally, I see the wealth inequality gap growing in large part due to the lack of pensions for this generations workforce.  The wealth of the working class of much of the previous generation was largely made up of two things: the value of their homes and their pensions.  Modern day retirement schemes - and their anemic balances for most workers - would logically be a large chunk of that missing wealth.

    So if we want to fix the looming retirement crisis, another scheme that puts money in the pockets of Wall Streeters regardless of whether or not they perform is the wrong answer.  The answer is to push to return to defined benefit pensions - and the traditional three legged stool approach to retirement in general - as the standard.  Just coming up with a new name for an already existing plan is just another example of Obama's 3rd Way/Republicrat centrist, Wall Street-centric/FIRE industry errand-boy nature.  Look, he's not a bad guy - but centrist, finance sector friendly plans aren't going to cut it.  If we want to fix the problem, we need to make waves, and some of the masters of the finance universe might just need to be shafted and get a bit pissed off because they can't make money for not performing anymore.  And that's Obamas problem as a lame-duck President - he's too afraid to piss people off, and he shouldn't be, because they can't hurt him now - he already won his re-election.  It's time to propose bold things, not meek, centrist nonsense designed to make it look like you're doing something while nothing actually changes for the better for the everyman.

  •  Although this is a step in the right direction it (0+ / 0-)

    leaves out those of us who retired and discovered that the companies that we worked for stole our pensions without notice and now we only have SS to live on....since there are few jobs for older adults at this time.  How about putting some money into the pockets of current retirees by raising SS benefits to cover the lost pensions?

  •  Bad (0+ / 0-)

    Wow, so we have a plan to push out more sales of treasury bonds to fund the budget we can't balance.

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