Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to AskKaren@mpt.org and post your comments below.

3

December

What to do when your job doesn't offer a retirement plan.

Karen Gibbs

I’m finding it difficult to save for retirement with no retirement plan at my job.  Is there any help out there for me?

- Patsy, Baltimore

 
BudgetingPatsy, you’re smart to start thinking about saving for retirement and there is help available for you.


After a two year pilot program, the federal government is rolling out myRA, a new savings plan designed for those who don’t have access to a retirement plan through their job.


According to the Federal Reserve Bank, nearly one-third of the labor force has no pension or retirement savings and, with the average monthly social security benefit of just $1,300, the so-called “golden years” won’t be so golden.


The myRA account is another way to start saving for retirement.  To be eligible, you must have taxable income and, if single, you can’t make more than $131,000 annually.  The account is yours; it is not invested with a specific employer so, if you change jobs, there is no hassle of rolling it over to a new employer.  
This account has no minimum deposit, charges no fees, offers no complicated investment options and is risk-free.  You can set up your account online by providing your government issued ID, social security number and name and birth date of your beneficiary.


You can contribute up to $5,500 annually if you’re less than 50 years of age.  Are you 50 and older?  You can contribute $6,500 a year.  This is your money and you can withdraw your contributions at any time, tax-free and without penalty.  However, if you’re under 59-1/2 years of age, you may have to pay taxes and penalties on any interest earned and withdrawn.


Your contributions are invested in U.S. Treasury bonds, and earn the same interest rate as the Government Securities Fund, the fund available to federal workers.  Right now, that rate is about 2%, much higher than you can get with a regular savings account or money market fund.


Once your contributions total $15,000 or your account has been open 30 years (whichever comes first), your account no longer earns interest and must be moved into a Roth IRA to continue to grow.


You can have your contributions deposited directly from your paycheck(s) or you can make deposits on your own.  You can start with as little as $5.  The point is to get into the habit of saving.  


For more information, go to:  https://myra.gov/


Good luck!

- Karen

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