Obama announces new retirement plan in SOTUA

[Laize]

So now he plans on implementing a new retirement account he has dubbed the "MyRA".

I think this is, surprisingly, a really good idea. It will enable people to voluntarily save more for retirement without worrying about (apparently) evil fees or stock market volatility.

Better yet, it does so without messing up the social security system or forcing others to fund your retirement.

[Symphonic]

What's funny is it's all about putting money in bonds, which is the WORST return for your money. It needs to be diverse. More risky while you're younger, and get progressively more conservative as you age.

[Tradewind]

My RRSP says "Welcome to 1957 America!"

good news though

What's funny is it's all about putting money in bonds, which is the WORST return for your money. It needs to be diverse. More risky while you're younger, and get progressively more conservative as you age.

The benefit is that it's a guaranteed return and secured principle. Ideally if they wanted it to be more like an RRSP they should let the persons direct their money. But Bonds aren't the end of the world considering if you had a 401k it's likely fucking obliterated these days.

[Rukentuts]

What's funny is it's all about putting money in bonds, which is the WORST return for your money. It needs to be diverse. More risky while you're younger, and get progressively more conservative as you age.

The point is it has no risk at all.

[Eviscero]

The point is it has no risk at all.

Well it has SOME risk. But, yeah, essentially 0 risk.

[Kujako]

What's funny is it's all about putting money in bonds, which is the WORST return for your money. It needs to be diverse. More risky while you're younger, and get progressively more conservative as you age.

It's more then that. It is intended to be Federally guaranteed, like a bank account. So that no mater what, you wont lose money in it. However, it is unclear that the President has the authority to enact such a plan without Congress, who of course will say no to anything coming out of the White House.

If it does happen, I'll switch to it from my 401k which frankly has at times lost money (90's tech bubble for example).

[Tradewind]

Weirdest thing with a 401k is that you can only pay into it through your employer via payroll deductions, or has that changed?

I would find that immensely annoying.

[Laize]

It's more then that. It is intended to be Federally guaranteed, like a bank account. So that no mater what, you wont lose money in it. However, it is unclear that the President has the authority to enact such a plan without Congress, who of course will say no to anything coming out of the White House.

If it does happen, I'll switch to it from my 401k which frankly has at times lost money (90's tech bubble for example).

I wouldn't even consider it. It's a great idea for people who simply CBA to learn about the stock market or other retirement plans... but it can be rolled over if one changes their minds, and could leave people with a decent nest egg if they contribute for a long time. You won't be able to live off of interest alone in retirement (which is my plan) but you will certainly have a solid annuity.

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Weirdest thing with a 401k is that you can only pay into it through your employer via payroll deductions, or has that changed?

I would find that immensely annoying.

401k is specifically an employer sponsored retirement plan.

There are plenty of other options if you don't want a 401k. We have IRAs as well. That's what I use.

[Gheld]

Bond rates are low because everybody is demanding low interest loans. And guess what bonds are based on? LENDING. Thus proving what I've been saying all these years... low interest EZ Credit is what's killing the middle class.

[Rukentuts]

Well it has SOME risk. But, yeah, essentially 0 risk.

If the government tanks your MyRA will be the last thing on your mind.

[Masark]

There are plenty of other options if you don't want a 401k. We have IRAs as well. That's what I use.

I was just looking up IRAs, and wow, your contribution limits are low.

[Laize]

If the government tanks your MyRA will be the last thing on your mind.

If there were no risk whatsoever, interest rates would likely be lower than the funds rate plus inflation.

There's always the risk of default. "Default", in this case, refers to ANYTHING not going according to plan.

If a payment is late or reduced, that's a default. That's the risk we're talking about.

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I was just looking up IRAs, and wow, your contribution limits are low.

Err... I'm not sure what you guys can invest in your RRSPs... but in an IRA you can put just about any security you wish. If you buy S&P500 ETF shares, chances are good you're looking at 8% or better p.a. growth which would put the $5500 limit at $1.6 million after 40 years.

So I'm not sure what the problem is.

[Masark]

Err... I'm not sure what you guys can invest in your RRSPs... but in an IRA you can put just about any security you wish. If you buy S&P500 ETF shares, chances are good you're looking at 8% or better p.a. growth which would put the $5500 limit at $1.6 million after 40 years.

So I'm not sure what the problem is.

1. Same. Pretty much any kind of investment can go in an RRSP. Stocks, bonds, mutual funds, GICs, pounds, bitcoins (hypothetically), etc.

2. Up here, the RRSP contribution limit is 18% of your gross income from last year up to an annually adjusted maximum ($24,270, as of 2014), plus any unused amount from previous years.

Your contribution limits are more like our tax-free savings account thingy, which works like an RRSP, only backwards.

[Laize]

1. Same. Pretty much any kind of investment can go in an RRSP. Stocks, bonds, mutual funds, GICs, pounds, bitcoins (hypothetically), etc.

2. Up here, the RRSP contribution limit is 18% of your gross income from last year up to an annually adjusted maximum ($24,270, as of 2014), plus any unused amount from previous years.

Your contribution limits are more like our tax-free savings account thingy, which works like an RRSP, only backwards.

Wait, you pay taxes on an RRSP?

[Prokne]

Theyre calling it a starter retirement plan but to me it would be better as a terminal retirement plan. If youre young you can ride through large swings in the market but when you need to use the money you want it to be there and not cut in half because of a market crash. Right now you should be able to change the distribution of your investments in you retirement accounts so you can work towards less risk the older you get. If people lost a lot of the retirement savings they needed because of the last crash its probably because they werent managing their account very well.

Theres also people who just dont save enough which is the real problem. The government can fix this easily for people who cant because their employer doesnt offer a retirement plan. Just increase the contribution limits to IRAs that already exist and make it easier to get one.

[Masark]

Wait, you pay taxes on an RRSP?

No, not on contributions.

[Tradewind]

Wait, you pay taxes on an RRSP?

Only when you begin collecting on it after retirement or if you make an early withdrawal. Contributions are considered before tax. You can then deduct contributions on your annual return and get 40% back, you can also use RRSP contributions to reduce your annual income to a lower bracket to pay less tax. I love my RRSP. Contribute, get hefty tax returns, put that right into my RRSP as well.

[Laize]

No, not on contributions.

Then I'm not sure what, if any, benefits one has over the other.

I don't know anyone who's ever felt the need to put away $15,000/year for their retirement.

[Masark]

Then I'm not sure what, if any, benefits one has over the other.

I don't know anyone who's ever felt the need to put away $15,000/year for their retirement.

The high contribution limit is useful for "Yay! A windfall!" years.

[Kraenen]

Then I'm not sure what, if any, benefits one has over the other.

I don't know anyone who's ever felt the need to put away $15,000/year for their retirement.

wouldn't that be a good idea for people who just make a lot of money?