Is Obama’s myRA plan really a solution for the retirement problem?

In his State of the Union speech last month, President Barack Obama addressed an issue that most working Americans are already aware of – the nation is facing a retirement crisis. Many individuals are not saving enough and may find themselves working when they're well past retirement age. 

What's the president's solution to this problem? Creating a government-backed retirement account that on the surface seems similar to a 401(k) or Roth IRA. Known as myRA, the account is intended to help low- and middle-income earners set up and make regular contributions to a savings account through a payroll deduction. 

There's nothing wrong with expanding your retirement planning strategy, but myRA may not be the way to go. One could even say that a savings account at your local bank would be a better idea. For example, although Obama claims that myRA is similar to a Roth account, savers don't have the option of choosing a variety of investments. They'll have to take whatever the government offers. Federal employees already have this option and they received a whopping 1.5 percent return on their savings last year.

myRA will also limit how much you are allowed to save. The government has put a lifetime cap of $15,000 on the accounts. That amount wouldn't even get you through your first six months of retirement.

In an article on, financial planner Scott Hanson wrote that myRA won't benefit anyone, and at best lines the pockets of the Treasury Department. 

"It will come as absolutely no surprise when several years from now we all view myRA as a grossly underutilized creation with costs that far exceed any benefits," Hanson wrote. "Unfortunately, though noble-sounding, this is just another feel-good program that will do little but provide sound bites for politicians and waste billions of taxpayer dollars."

If you are preparing for retirement, make sure you know about all of your options for savings.