In July the U.S. Treasury announced the cancellation of myRA (my Retirement Account), a starter-retirement-savings product they launched in 2015 to help people without access to employer-sponsored retirement plans. The Treasury developed this product, under the Savings Bond authority of the government, in recognition of the growing retirement-savings crisis in the United States. It built on the idea that people whose employers offer a plan to encourage savings are much more likely to take the initiative to save than if they’re left to their own initiative, and the recognition that many employed people don’t have that option. myRA focused on less-experienced savers with features that emphasized safety, simplicity and accessibility (as opposed to characteristics more appealing to sophisticated investors). Lastly, it stressed this “starter” element by setting a cap of $15,000, at which point the saver would need to transfer into a commercial savings product.
The Treasury offered several reasons for its about-face on this product. A belief that the private sector could provide answers for savers, and that this product gave the government an “unfair advantage” over private sector offers are among those. This point of view crystallizes the arguments taking place across the government about the degree to which our society should rely on the marketplace for answers and how the government should respond to evidence of problems that don’t seem to be getting addressed by the market.
We’re pretty deeply involved in this topic of saving. What we see is that it’s one of those behaviors that’s hard to initiate and sustain. It requires knowledge, discipline and often pain. It’s hard to say it’s fun, yet a larger vision helps with the motivation to save. The right guidance and products can nudge individuals into decisions that help them. And, with encouragement, their decision-making confidence can grow and become an increasingly strong personal motivator.
Financial institutions, and especially the FinTech sector, continue to experiment with products and programs to help. There have been some modest successes. But even with new technology tools, there’s still a need for products specifically attuned to struggling savers. There’s also still a need for better strategies to provide the motivation that will help this group sustain their efforts.
So, should the government stay out of this financial territory? What is its role when we can identify retirement saving as a growing problem? myRA certainly is not the whole answer. But it’s a well-designed tool targeted at those most in need of help in taking charge of their financial affairs. We need to find a better way to balance private sector interests with strategies to improve the lives of Americans.
The links below provide further detail and opinion about the myRA decision: