Betamax, Edsel, New Coke and...now MyRA Joins An Elite Class of Marketing Failures

When announced in the 2014 State of the Union, and launched less than three years ago in December 2014, the “My Retirement Account” or “MyRA” was touted by the U.S. Department of the Treasury as Simple, Safe, and Affordable.  The announcement promised “… a new retirement savings account for individuals looking for a simple, safe, and affordable way to start saving.” MyRA would feature – no minimums, no fees (taxpayer funded), a single government-backed investment, and portability.  The design also had provisions that were somewhat inconsistent with saving for retirement - withdrawals of contributions at any time and a cap on the maximum accumulation of $15,000.    

Fast forward to last week when the Treasury Department announced the end of MyRA. The program will be terminated because only 20,000 – 30,000 Americans (depending on press reports) had enrolled and contributed (up to) $34 million while the federal government spent $70+ million of taxpayer dollars to implement and maintain the program.  Treasury confirmed it would terminate the program because of the roughly $10 million ongoing annual cost.  See:  https://www.treasury.gov/press-center/press-releases/Pages/sm0135.aspx   

Did you catch that?  We spent $70 million to encourage 30,000 or so Americans to each contribute about an average of $1,100 – of which a considerable amount has already been withdrawn.   Anything wrong with the alternative of just giving the next 30,000 Americans $1,100 while pocketing $36 million in savings for taxpayers?

Why didn’t MyRA succeed?  The MyRA was a limited IRA solution, offering a single investment option and an arbitrary upper limit on asset accumulations.  As mentioned in the Treasury press release, “Demand for and investment in the MyRA program has been extremely low.”

What could have been done differently to make MyRA successful?  MyRA was probably a success for the 20,000 – 30,000 individuals who signed up.  Many saved monies that they might otherwise have spent.  And, hopefully, when MyRA closes down, they will not use the termination of the MyRA program as an excuse to withdraw monies – so called leakage in the retirement industry.  However, if success is defined as widespread use, MyRA was never likely to succeed.  And, perhaps the only surprise is that we did not terminate the program as soon as we knew there would be such minimal enrollment – instead, taxpayers invested $70 million and waited three years.         

What might folks with no employer-sponsored retirement savings plan do as this option goes away?

• MyRA is an “access” or “coverage” solution – structured as a Roth IRA.  However, every American wage earner has had access to a viable retirement savings solution for the last 35+ years - it is called the Individual Retirement Account or IRA.  Almost all Baby Boomers who have consistently contributed the maximum to an IRA since 1982 (the past 35 years) and who continue IRA contributions up to or beyond their retirement age will generally succeed in financial preparation for retirement.  So, there hasn’t been a retirement savings “access” or “coverage” “crisis” since at least 1982. America’s retirement “crisis” is/was not one of “access” or “coverage”, but one of prioritization.  
• Again, all workers, whether or not they have access to an employer-sponsored plan, can continue saving in an IRA.  The few who participated in MyRA should consider a direct transfer of IRA monies – perhaps to the institution where they do their banking.  Then, they might consider constructing an automatic savings solution – instruct the bank that receives their paycheck to automatically move a portion of those monies to an IRA. This could be a different route to the same (perhaps a better) retirement savings solution.