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            For Immediate Release                      January 29, 2014          FACT SHEET: Opportunity for All: Securing a Dignified Retirement for All Americans
Creating the “myRA” – a Simple, Safe, and Affordable Starter Savings Account to Help Millions of Americans Start Saving for Retirement

 * Year of Action: Making Progress Through Executive Action *

To build lasting economic security, the President will act on a set of specific, concrete proposals to expand opportunity for all Americans. In the State of the Union, the President announced that he will use his executive authority to direct the Department of the Treasury to create “myRA” – a new simple, safe and affordable “starter” retirement savings account that will be offered through employers and will ultimately help millions of Americans begin to save for retirement.
- Starter Savings Account: Making It Easier to Start Saving   for Retirement. This new product will be targeted to the many Americans   who currently lack access to workplace retirement savings plans, which is   usually the most effective way to save for retirement. Starting to save is   just the first step towards a secure retirement, and the President wants to   help more Americans save for their future.
- Safe and Secure: Principal Protection So Savers’ Account   Balance Will Never Go Down. The product will be offered via a familiar   Roth IRA account, and savers will benefit from principal protection, so the   account balance will never go down in value. The security in the account, like   all savings bonds, will be backed by the U.S. government. Contributions can be   withdrawn tax free at any time.
- User-Friendly for Savers: Portable Account with   Contributions that Are Voluntary, Automatic, and Small. Initial   investments could be as low as $25 and contributions that are as low as $5   could be made through easy-to-use payroll deductions.  Savers have the   option of keeping the same account when they change jobs and can roll the   balance into a private-sector retirement account at any time. 
- Favorable Investment Return: Same Secure Investment   Return Available to Federal Employees. Savers will earn interest at the   same variable interest rate as the federal employees’ Thrift Savings Plan   (TSP) Government Securities Investment Fund. 
- Widely Available: Available to Millions of Middle Class   Americans Through Their Employer. This saving opportunity would be   available to the millions of low- and middle-income households earning up to   $191,000 a year.  These accounts will be offered through an initial pilot   program to employees of employers who choose to participate by the end of   2014.  The accounts are little to no cost and easy for employers to use,   since employers will neither administer the accounts nor contribute to   them.   Participants could save up to $15,000, or for a maximum of   30 years, in their accounts before transferring their balance to a private   sector Roth IRA.

*  Continuing to Work With Congress on the President’s Existing Proposals to

Make Sure That All Americans Can Have a Dignified Retirement  *

The President remains committed to working with Congress to help secure a dignified retirement for all Americans. While Social Security is and must remain a rock-solid, guaranteed progressive benefit that every American can rely on, the most secure retirement requires a three-legged stool that includes savings and pensions. That’s why the President is using his executive authority to create the “myRA” and has already proposed to work with Congress on the following proposals to help Americans save for their retirement:
- Giving Every Employee Access to Easy, Payroll-Based Savings   Through the Auto-IRA. About half of all American workers do not have   access to employer-sponsored retirement plans like 401(k)s, which puts the   onus on individuals to set up and invest in an Individual Retirement Account   (IRA). Up to 9 out of 10 workers automatically enrolled in a 401(k) plan   through their employer make contributions, even years later, while fewer than   1 out of 10 workers eligible to contribute to an IRA voluntarily do so. The   President’s budget will propose to establish automatic enrollment in IRAs (or   “auto-IRAs”) for employees without access to a workplace savings plan, in   keeping with a plan that he has proposed in every budget since he took office.   Employers that do not provide any employer-sponsored savings plan would be   required to connect their employees with a payroll deduction IRA.  This   proposal could provide access to one-quarter of all workers, according to a   recent study.

-----  Making Sure the Auto-IRA Works for Workers and Small Businesses. Workers would not be required to contribute and are free to opt out. Employers would also not contribute. The plan would also help defray the minimal administrative costs of establishing auto-IRAs for small businesses, including through tax incentives.
- Removing Inefficient Retirement Tax Breaks for the   Wealthiest While Improving Them for the Middle Class.  The Auto-IRA   will spread the tax benefits for retirement savings to millions more   middle-class Americans.  Current retirement tax subsidies   disproportionately benefit higher-income households, many of whom would have   saved with or without incentives. An estimated two-thirds of tax benefits for   retirement saving go to the top 20% of earners, with one-third going to the   top 5 percent of earners. Our tax incentives for retirement can be designed   more efficiently.   According to one 2012 study, additional tax   expenditures are a comparatively inefficient way to generate additional   saving. The President has proposed to limit the benefits of tax breaks,   including retirement tax preferences, for high income households to a maximum   of 28 percent.  The President has also proposed to limit contributions to   tax-preferred savings accounts once balances are about $3.2 million, large   enough to fund a reasonable pension in retirement.

* Importance of Securing a Dignified Retirement for All Americans *
-  Many Americans lack access to workplace retirement savings plans –   usually the most effective and generous means of saving for   retirement.  About half of all workers and 75 percent of part-time   workers lack access to employer-sponsored retirement plans. 
-  The financial crisis dealt a severe blow to the retirement outlook for   many families, wiping out more than $12 trillion dollars in household   wealth. While financial markets have returned to their pre-crisis levels,   median household wealth has only recovered 45 percent of the losses during the   recession. 
-  The risk of an insecure retirement is especially great for women,   minorities, and low-income Americans. Women continue to be less prepared   for retirement than men and comprise 63 percent of the elderly living below   the poverty line. White households have six times the wealth, including   retirement savings, of African Americans or Hispanics. And low-wage and   part-time workers are just one-third as likely as high-wage and full-time   workers to participate in an employer-based retirement plan. 
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