Lydia DePillis explains the retirement savings account Obama touted on Tuesday:
The MyRA option would create a cheaper way for smaller employers to enroll their workers in some sort of plan, by taking an automatic payroll deduction that goes into a Roth IRA-style, government-backed account with the employee’s name on it. There’s only one investment option available, and it won’t appreciate that quickly, but it’ll be impossible to lose money. It’s basically the embodiment of former Office of Information and Regulatory Affairs director Cass Sunstein’s “nudge” philosophy, which pushes people by default into the choices that make most sense for them.
Barro estimates the cost:
This program will have a modest cost to taxpayers: Essentially, instead of issuing short-term Treasury bills at almost no cost, the federal government will do a little bit of its borrowing through this G Fund-like security, paying an extra point or two of interest in the process. If you imagine a program at scale with 50 million accounts averaging $5,000 in balances, the cost to taxpayers would be $2.5 billion per year for every point of interest rate premium.
Allahpundit wonders how popular it will be:
How many people will this attract, realistically? Just 24 percent of the public is confident in the stock market as place to save for retirement, according to one recent survey. That’s part of the appeal of the myRA, especially to groups that are more pro-government on balance in the first place — if another financial crisis hits, your money’s still safe — but Treasury rates are so low that it’s anyone’s guess how much encouragement a two-percent return will provide to people who are living paycheck to paycheck.
Bloomberg’s editors expect low participation. They note that currently fewer “than 1 in 10 workers who are eligible to contribute to existing Individual Retirement Accounts bother to do so”:
Employer contributions to retirement savings, whether in the form of defined-benefit pensions or employer-matched 401(k) plans, have fallen. Without those contributions, especially in programs that encourage or require workers to make contributions of their own, most Americans are saving too little to retire in comfort.
The Dish 