Hoping to get more people to save for retirement, President Obama announced in his State of the Union address this week that he’s authorized the Treasury Department to come up with a starter savings account, dubbed “myRA.”
During a conference call with media, senior administration officials laid out some of the details of the new account.
— It will be set up like a Roth IRA but is similar to a savings bond and, like savings bonds, will be backed by the U.S. government. That means people’s principals will be protected and can’t go down in value. Other key features:
— People would contribute after-tax dollars. It could take as little as $25 to open an account, and contributions could be as low as $5.
-- Contributions can be withdrawn tax-free at any time.
-- No fees.
-- The retirement savings accounts will be offered through employers via payroll deductions. The target savers are people who don’t have access to workplace retirement savings plans.
-- People will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan (TSP) Government Securities Investment Fund.
-- There will be an income limit. Only households earning up to $191,000 a year will be eligible for the account.
-- These accounts will be offered through an initial pilot program.
“Let’s do more to help Americans save for retirement,” Obama said in his address. He also touched on a number of other financial issues.
On the Economy: In an effort to get more Americans back to work, Obama said, he wants “to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs right here at home.”
On minimum wage: Obama said he was using his executive power to raise the minimum wage to $10.10 per hour for workers on new government contracts, reports Zachary A. Goldfarb of The Washington Post.
On equal pay for women: One of the best lines of the night came when Obama was talking about workplace polices that make it hard to parent. A woman should be able “to have a baby without sacrificing her job. A mother deserves a day off to care for a sick child or sick parent without running into hardship. And, you know what? A father does, too.”
Then came the line of the evening: “It is time to do away with workplace policies that belong in a ‘Mad Men’ episode.” You don’t need to watch the AMC show about an advertising agency set in the 1960s to get the point. But it helps.
Color of Money Question of the Week
What do you think of the new “myRA” starter retirement account? Send your responses to email@example.com. Put “Starter Savings” in the subject line, and include your full name, city and state.
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Credit Card Scam Alert
Be sure to double-check your credit and debit card statements because scammers are at it again.
The Better Business Bureau is alerting consumers of a new worldwide scam that’s charging a small sum to stolen credit card numbers in hopes that it goes unnoticed. The BBB and security experts say many recent victims were billed $9.84, reports USA Today.
“The scheme predates the recent security breach involving more than 100 million customers at Target,” report John Bacon and Byron Acohido of USA Today. “But it’s likely that the massive worldwide attention surrounding the Target investigation has helped expose the $9.84 scam.”
The BBB is directing consumers who find the bogus charge to contact their banks to report the charge and to request a new card because at that point the account information has been compromised.
Click here to learn more about the scam and how to reduce your risk of credit card fraud.
It’s about to get real intense for one of the husbands on Bravo’s “Real Housewives of Atlanta.”
Apollo Nida, the husband of Atlanta housewife Phaedra Parks, has been charged with bank fraud and identity theft, according to a complaint filed by the U.S. district attorney’s office, reports Rodney Ho of the Atlanta-Journal Constitution blog Radio & TV talk.
Nida is accused of creating fake debt collection companies so that he could get access to consumers’ personal information, which he then allegedly used to open fraudulent bank accounts to funnel stolen U.S. Treasury checks and auto loans.
In addition, Nida is accused of stealing “retirement checks issued to Delta Airlines employees, and checks in the names of real people that were owed unclaimed property from various state and federal government agencies,” the complaint adds.
This isn’t Nida’s first run-in with the law.
Before marrying Parks in 2009, Nida served five years in a federal prison for violating federal racketeering laws related to auto title fraud, reports CNN.
Seniors Supporting Adult Children
The Pew Research Center found that “among the 60-plus set without jobs 43 percent are still helping grown kids out with the bills,” reports Chris Taylor of Reuters.
For last week’s Color of Money Question, I asked: “Is it assisting or enabling when senior parents are still supporting their not-so-young adult children?”
Here’s what some of you had to say:
“Unless the adult children have some extenuating circumstance, like health issues, parents are enabling those children if they continue to support them financially,” wrote Judy Burns of Oklahoma City. “Who will be around to help the parents when they run out of retirement funds?”
Sheila Epstein of Rockville, Md., wrote: “Parents do their children no favors by supporting them into middle age… I’ve known some of these sheltered children, and while they may be very nice people, their core of childish selfishness keeps them from earning their place in the world because they don’t have to. Yet eventually they are dumped into a brutal financial reality at a very vulnerable time in their lives. The kindest thing a parent can do is push the grown child out of the nest.”
Rhonda Bryant of Silver Spring, Md., doesn’t think that we can draw a hard line of assisting vs. enabling. “Given the economy, an adult child may need help on an occasional basis,” Bryant said. “But if a senior parent is putting out money every month, then a conversation with the adult child about scaling back their lifestyle is in order. Part of being a grown-up is learning how to live within your existing means. Some adult children think their lifestyle or status should be at a certain level, but it doesn’t match their reality. Living according to their independent financial ability without parental help should be their goal.”
Tia Lewis contributed to this report.
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