On January 28, President Obama delivered his annual State of the Union address to Congress and the American public.
In the early days of the United States, the address was nothing more than a letter from the president to Congress about the current state of the union.
Today, the address tends to focus on the president’s policy proposals for the upcoming year more than a report on the state of the union.
During his recent address, the president outlined several proposals. Yet one in particular caught our attention — MyRA, which aims to help poor and middle class Americans save for retirement, or so the president claims.
What is MyRA? How Would It Work?
In short, MyRA would function similarly to a private Roth IRA. Holders could deposit “after-tax” funds into their account, up to a certain amount each year.
Yet unlike private IRAs, the MyRA is restricted to government bonds, and the depositors’ principal is fully insured.
In his address, the president claims the treasuries and bonds earn “a decent return with no risk of losing what you put in.”
Citing the need for the program, Obama explained that most workers today do not have a pension, and that “…a Social Security check often isn’t enough on its own.”
During the address, the president also announced he would be implementing MyRA through an executive order.
Who Can Argue With Having More Americans Saving for Retirement?
It seems the president’s policy initiative, on the surface, is a well-intentioned move to help lower income Americans build a nest egg for their later years.
However, according to Nick Giambruno from the International Man, the MyRA proposal is at best a “sucker’s deal,” and at worst the first step toward nationalizing private retirement accounts.
Giambruno explains the timing of this policy. Foreigners aren’t purchasing as much U.S. government debt, and the Fed has begun its long-awaited tapering. MyRA will take the slack by bringing in new buyers to finance the government.
The problem is that the yield on Treasuries — which have been at historic lows — probably won’t be able to keep up with inflation. (“Return-free risk” is the phrase used by financial journalist Jim Grant to describe Treasuries as investments.)
Giambruno goes on to explain that the MyRA may be a way to nudge Americans into accepting government involvement in their private retirement savings.
A bold charge indeed, but considering that, since 2008, six of the world’s countries (Argentina, Poland, Portugal, Ireland, Hungary and Bolivia) have confiscated retirement accounts to address fiscal imbalances, it’s not that far-fetched. Especially when you think about the U.S. government’s fiscal issues.
If our government’s delicate financial situation were to become more severe, a variety of measures like new contribution mandates, forced conversions and special taxes could be imposed on private retirement accounts, Giambruno explains.
Only time will tell if the worst of Giambruno’s observations are true. Yet there’s no denying the government’s fiscal situation, which makes the timing of these accounts an interesting coincidence.
But Poor and Middle Class Americans Already Have Savings Options That Are More Secure…
Our purpose here isn’t to offer investment advice or our opinion on a certain government proposal. This story drew our attention because it highlights one of the central benefits that gold, silver coins and other precious metals have over savings vehicles like MyRA.
If you buy metals directly, they’re yours. You have ultimate control over them, and can buy or sell as much as you want as often as you want. If you’d like to take advantage of the tax benefits of an IRA, you can set up a precious metals IRA at an affordable rate (although there are a few restrictions and penalties for early withdrawals).
Further, gold and silver are not connected to any one particular company or government. Coins and bars will have value regardless of circumstances on the ground.
If a crisis occurred, and every MyRA account holder tried to withdraw all their funds at once, they may be in for a surprise.
What Do You Think?
Is MyRA a new way for Americans to set aside something for retirement?
Or is it a low-to-no return option aimed at getting more money into the government’s coffers?
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