Retirement readiness: Grim in every state
Retirement readiness is grim in every state in the country. That’s according to a new report presented in Washington, D.C by the National Institute on Retirement Security.
Experts say this is yet another wake up call for Americans to take ownership of their future.
President Barack Obama t put together a plan called the My Retirement Account, also known as MyRA.
Certified financial planner, Pat Trimp said the plan is implying safety by investing with the government and many people are better off putting their money in traditional accounts.
Trimp said the reality is most Americans will just have to work longer before they retire.
“It takes two incomes to provide enough for families. They’re having a hard time finding the additional savings now,” said Trimp.
The MyRA accounts are aimed at low to middle income adults who don’t have access to employer-sponsored retirement plans. That’s about half of all workers and 75 percent of part-time workers.
The MyRA is like a Roth Individual Retirement Account, which allows people to invest after-tax dollars and withdraw the money in retirement tax-free. However, unlike traditional Roth IRAs, the accounts will only invest in government savings bonds.
“This is being backed by U.S Treasuries, so you can’t invest in anything but Treasuries,” said Trimp.
Trimp added the the yield on a MyRA is low and so is the return.
“That isn’t a beneficial use of the money. That’s the problem I’d have with it. Two percent, that’s bank return,” said Trimp.
Traditional 401(k)s are where most of his clients are still putting their money.
As for investing in the stock market, Trimp said it’s not for everyone.
“If you are going to panic when the market is down don’t ever put money in stock market,” said Trimp.
He said the recession taught many people a tough lesson on saving. Trimp added Americans have been reducing their personal debt at a historic rate which has gotten debt levels for the average person down to what it was in the early ’80s.
