Obama myRAWho is he kidding? Obama must be concerned about his declining popularity in the polls or losing the Senate in the Fall elections. Why else would he support myRA as a solution for the nation’s retirement savings woes?

I guess you could say some retirement savings is better than no savings. But, why would Obama commit political capital to a flawed plan? I can think of two primary reasons. It sounds good to low income Americans and it increases the number of people who will vote Democrat in the fall.

Obama may also be using myRA as political grandstanding to divert the American public’s attention away from his shortcomings as President. Everyone knows Americans live from headline to headline. His recent record, can you say Obamacare, will be yesterday’s news if he creates some new headlines.

Low Income Americans

Does he really believe low income Americans, if they have jobs, have discretionary dollars they can afford to lock-up in retirement accounts for the next 30 years? It is hard to save for retirement when your goals are adequate food and shelter for children.

The $5 Solution

Can you really solve your retirement problems by saving $5 per month? So what if you reach the lofty goal of $15,000 in 30 years? This will produce $60 of additional income per month at a 5% distribution rate. But, that is before inflation has eroded most of the purchasing power of the $60. The real value of $60 in 20 or 30 years might be $20, which just might be the cost of a dozen eggs.

Government Bonds

If Obama was really trying to help lower income Americans why did he limit myRA investments to government bonds that are producing historically low rates of return? Back out the impact of inflation and you barely have a positive performance.

Why wouldn’t Obama create higher performing investment pools not limited to government bonds? Then let Americans, who are smart enough to make 401(k) choices, select the pool that makes the most sense for them. Their choices could be driven by their tolerance for taking investment risk. This is better than the one-size-fits-all approach of the Obama administration.

The reality is if you are going to save small amounts of money you are even more dependent on performance to accumulate the assets you need for a comfortable, secure retirement.