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Never too early to save for retirement

Sometimes we need incentives to save
Sometimes we need incentives to save
Photo by Justin Sullivan/Getty Images

I don’t usually include the financial aspects of retirement in this column as I tend to think there are other resources for that. My focus is usually on the emotional and psychological aspects of this major life change, but since President Obama introduced the myRA a few months ago, it is time to examine it and see if it fits into your retirement plans. You are never too old—or too young-- to begin saving for your retirement. I remember laughing when at my first post college job the HR person mentioned a year in the 21st century when I would be eligible for retirement funds. It sounded so far away, yet here I am still working and still saving.

Created because so many workers in this country do not have access to retirement savings accounts like a 401K, myRA is a starter account for part time and low wage workers. The program is run by the Treasury department and savers will earn modest interest on their money, a variable interest rate that will be the same as that offered to federal employees who have a Thrift Savings Plan, recently between 1.47% and 4.93% a year.

Many companies offer programs like the 401K only to full time employees, so part time and seasonal workers have not had access to such savings programs before. Employers will now be able to offer the new program as a benefit by the end of 2014.

The myRA account is free to open and is available to anyone who earns less than $120,000 a year and has no access to an employer sponsored plan. Employers can make automatic payroll deductions and the employee can choose how much or how little they want to save each month. Deposits can be as low as $5 a month and withdrawals can be made tax free after 5 years or anytime if you are 59 ½ years old or more. Once the account reaches $15,000 or one has had it for 30 years, the money must be transferred to a private account.

As of now, companies have to sign up to participate but they will not contribute to the plan. If your employer has not mentioned it to you, be sure to ask about it and encourage them to sign up. Not intended to be enough for a comfortable retirement, the idea is that workers in their 20’s and 30’s can begin saving and hopefully they will continue to save through their working years. And since they are not tied to a specific employer, savers can take the fund with them when they change jobs. For more information visit