It’s been a slow first year for the starter IRA sponsored by the federal government to help millions of Americans prepare for retirement.
Only 20,000 people have signed up for the myRA since its launch. The White House had predicted it would ultimately help millions.
And now two experts say that low turnout was probably inevitable—that it was obvious the Obama administration was overpromising from the start because of the nature of retirement savings problems and the kinds of workers myRA was designed to target.
Those are the feelings of Dallas Salisbury, the former longtime chief of the Employee Benefit Research Institute (EBRI), and Gordon Gray, the fiscal policy director for the American Action Forum (AAF), a conservative think tank.
“The low numbers, like with Roth IRAs, are a very clear proof of how difficult it is to expand the system and to get people to lock away savings for retirement,” Salisbury said. “Those who most need an IRA are low income and do not even have emergency savings, so retirement savings has not and will not likely be a priority.”
He noted that far less than 10% of those who could put money into a regular IRA since 1987 have ever done so.
With the low number of enrollees into the myRA program and its only $17 million in assets, Salisbury said the per person cost of administering the program is probably extremely high.
State plans to bring IRAs to small business workers are likely to be expensive to run as well, he cautioned.
Like Salisbury, Gray said there is no silver bullet to substantially improve the numbers for the nearly half of American workers who aren’t in a workplace retirement savings program.
“You can go too far in pushing an individual solution to what is a broad base problem,” said Gray in criticizing Obama and the Treasury Department for tooting the horn about myRA too loud.