Readers Weigh in on myRA’s Demise

Last week the U.S. Treasury announced that it was winding down the myRA program, noting that there was “…very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program.” This week, NAPA Net readers weigh in.

Arguably the news caught many in the industry (and those outside the Trump administration) off guard – but it wasn’t unexpected: 59% of NAPA Net readers said they weren’t surprised, though 27% said they hadn’t given it much thought. About 4% said they were surprised, while the remaining 10% were split between those who were “disappointed,” “glad” and “surprised, but not because it was a good program, but because we seldom shut programs down.” One reader noted: “Not surprised, given this administration wants to undo everything initiated by the last administration. No regard for who it hurts.” Another asked (presumably with tongue firmly in cheek): “There was a myRA program? For real?”

A Good Thing or a Bad Thing?

For the most part (52%), respondents thought that the myRA program termination was a good thing, while only about 8% thought it was a bad thing. Just under 6% characterized it as neither a good nor a bad thing, though nearly a quarter (23%) agreed with the notion that it didn’t bode well for state-run retirement programs.

The remaining one in eight opted for “other,” which ran the sentiment gamut – everything from “economically it’s a good thing” to “A good thing and it doesn’t bode well for the states” to “When it costs so much for so little benefit, it doesn’t make sense to continue” to it “Eliminates another avenue for retirement savings.” One reader characterized it as “Inevitable. It was too weak to be of much use.”

We asked readers to identify the factors they thought were responsible for the program’s termination and, given the opportunity to select as many as they wanted, the responses came in as follows:

79% – lack of saver interest
59% – lack of knowledge about the product
42% – distrust of government
40% – lack of employer support
38% – change in Administration’s
27% – lack of money
8% – too complicated to set up

Other responses included:

  • Too small savings limit and lack of investments with appreciation potential, especially for young individuals.
  • Based on the cost to benefit, the myRA program was financially inefficient and the private sector does a much better job of servicing America’s workforce.
  • Lack of effective communication to employers and individuals – thus the need for an adviser.
  • Low returns.
  • Very low income people can’t afford to save anything. With an average balance of $500, it doesn’t seem to help.
  • Lack of retirement product knowledge – there are other better options available.

However, asked to name the factor they saw as most contributing to the termination, it pretty much came down to two:

31% – change in administrations
29% – lack of saver interest

Reader Comments

We got a lot of reader comments on this week’s NAPA Net reader poll. Here’s a sampling:

“Although in its infancy, an average annual taxpayer cost of $500 per account is extremely high. Particularly when the average account balance is $500.”

“This idea isn’t going away just because myRA is going away. The people and forces who want to make the retirement industry a public utility are keeping quiet for this administration but will be back when they see an opening.”

“Lack of awareness and promotion, along with competition from states. Very lackluster rollout that never seemed to make it beyond ‘soft.’”

“I thought it was a good idea and a way for people without access to 401ks to save.”

“I opened a MyRA account; it was easy to open; easy to contribute to and paid a good rate; I notified several of my friends about it who opened accounts. I think the greatest problem was lack of outreach and publicity about the program.”

“I saw the failure and demise of this program from the very beginning, although I am surprised how quickly it closed. I supposed the Trump administration contributed to the expediency. There were already ample and superior products in the private sector to take care of the low-income earner as try to save for retirement. The government needs to realize that LOW INCOME PEOPLE DON’T HAVE THE MONEY TO SAVE FOR RETIREMENT!”

“The gov’t should have spent the $70M promoting existing Roth arrangements at discount brokerages and provide subsidies to those who contributed. MyRA was in part redundant. I think its cancellation is completely politically motivated under the new administration, but this was doomed to fail from the beginning. Exemption from ERISA for state run plans would have made more of an impact, but that too was terminated merely for the sake of political expediency.”

“Targeted participants do not have very much income to save and already have IRAs available as a vehicle to save for retirement.”

“It is another example of Washington’s poor discretion on the use of taxpayer dollars. Why did they not implement a more meaningful program with higher savings limits and a menu of investment options?”

“The results of the myRA program provide all the support the private pension industry needs to prove that the private sector is the most qualified for helping people save for retirement.”

“Poor education – it actually had a better risk-free net return than any other investment available. Roth aspect did not help understanding either.”

“This proves the value of the current private retirement system and why our current system should be maintained.”

“Shocker!!! I hate to say I told you so, but… I told you so! God forbid the government actually listen to folks who are actually in this business and deal with people on a daily basis. Instead let’s go blow $70M on this crappy program that never had a chance to survive. This should be the poster child for why the government needs to stay the hell out of the retirement business. Makes me sick to think about it. I’m just glad they cut it off now before it bled endlessly for another decade or two.”

“I find it hard to believe that it costs as much as it has! $10 million per year is outrageous!”

“The myRA program should never have been established. Everyone knew it was another liberal spending program that would fail. We already had a retirement savings program in place called IRAs. This was another government duplication that has cost the hard-working average American worker over 70 million dollars. The big-spending liberals are always stating their policies in a way to sound good but never make sense financially and end up costing the taxpayer more than the good it provides and puts us deeper into debt (see Obamacare, etc.). The government needs to get back to only covering the basics like our Founding Fathers designed and quit spending money on programs like this and running shrimp on treadmills so that they have something to spend our taxes on.”

“They built it… and they did not come! The retirement problem isn’t that there aren’t enough qualified plan programs… the problem is that employees earning minimal wages aren’t going to defer. Hello??”

“Government is just involved in too much stuff. I never agreed with the creation of this program. You mean to tell me that someone who didn’t have the money or couldn’t be bothered with setting up an IRA, someone who couldn’t walk into their bank and set up a savings account, all of a sudden was going to start saving into this myRA program? I just didn’t buy it. If you don’t have the money to save or aren’t inclined to save, you aren’t suddenly going to start saving because there is a myRA program.”

“At a current cost of $3,500 per participant to set up the program, and $500 per year to run, this is definitely not a cost-effective program for taxpayers. Although well-intentioned, the program is a current day example of why auto programs in retirement plans are a must.”

“An unfortunate use of money. The concept of increasing retirement savings is great – but creating a new version of the Roth IRA is not necessary. It was like many things dreamt up by politicians – spending money to show they care, while not providing much value. I am surprised it was shut down – we often just keep programs running adding more complexity and confusion to a market that already has plenty.”

“For a start-up – not terribly expensive (how much did it cost the ‘industry’ to develop a platform for 401(k)s/403(b)s/457s and IRAs?). The ‘industry’ has nothing to offer small savers/investors. We are constantly bombarded with messages about how the amount you save is more important that what you invest in, and starting ‘early’ makes all the difference. Yet, Wall Street sets minimums of $250k or more, and banks and insurance company products underperform, have high fees and lock you in for the long haul.”

“Investors need an incentive to save – a significant tax break, an employer match, or some other cost savings. The program also needs to be more visible and accessible. If third parties (accountants, financial advisors, administrators) were paid for advising clients on these plans, that would also increase their popularity.”

“Just another example how government wrongly believes they know best. Rather than continuing to create government run programs that always fail, perhaps they might consider supporting private sector efforts that are more cost effective and produce far better results!”

“Although I despise almost everything about the Trump administration, this is a welcome mercy killing. The myRA program was a non-starter, and given the wholly foreseeable lack of interest and the expense of continuing it, the termination of the program is entirely justified.”

“I had expected myRA to collapse under its own weight at some point. What a silly idea for the government to think it can beat the private marketplace at its own game – especially when ASPPA statistics show that the only way most people will ever save is through an employer-sponsored plan. Sheesh.”

“No one ever asked us about this (and, of course, as a TPA for the usual qualified retirement plans *we* didn’t promote it), so I don’t think it was well promoted at all. I was a little surprised to find out it was ending because I don’t think I realized it had actually ‘become a thing’ to begin with. Either that or I dismissed it when I first heard about it and then forgot about it. Perhaps better marketing could have prevented its untimely demise.”

“While I think there are a number of reasons for its failure and termination, the termination would likely have not happened if the election had gone the other way. It likely would have continued as another failed government program that was inefficient and with costs above the benefit from it.”

Thanks to everyone who participated in our weekly NAPA Net reader poll!

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