In the 2014 State of the Union Address by President Obama, he announced a new government-run retirement account called a MyRA. The moment the details were released, I wrote a blog post that this account was just horrible. It offered: high risk, high fees, and tiny returns. I recommended workers avoid this poorly thought out account.
It is now three years later and the MyRA program was just shut down. The government spent $70 million (that it doesn’t have) to launch this dog, and only lured 20,000 people to signup with an average account size under $1,700. People that put their money in a stock market index earned 400% more return than the MyRA participants.
The best retirement account for deferred or tax-free growth is a Roth IRA account. (Some employers offer a Roth-401(k) or Roth-403(b) account, which is the same thing.) Unlike IRA’s or other retirement accounts, a Roth allows for both contributions and earnings to be withdrawn tax-free in retirement. This is a tremendous financial benefit that will add roughly 25% to the money you’ll be able to spend in retirement. This 25% number is probably low since state and federal taxes, of all kinds, have only been increasing.
If you have no retirement savings or accounts, many Roth IRA custodians allow for small opening balances and tiny deposits. If you’re unsure where or how to begin, I recommend opening a Roth IRA account at Vanguard.com and enlisting their assistance in getting invested into a broad stock index fund.