Is Obama’s myRA the Retirement Savings Account You Need?

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Source: Getty Images

Source: Getty Images

Consumers in the United States pulled off a neat trick in the fourth quarter. With the weight of the holiday spending season on their shoulders, thick heating bills in their mailboxes, and wages nearly stagnant, U.S. consumers managed to spend money faster than they earned it.

According to the Bureau of Economic Analysis, real disposable personal income — what people have left to spend after taxes and inflation (chained 2009 dollars) — increased at an annual rate of 0.8 percent in the fourth quarter. This is a dramatic deceleration from the 3 percent growth rate recorded in the third quarter and below the 4 percent growth rate recorded in the second quarter. Meanwhile, real personal consumption expenditures increased at an annual rate of 3.3 percent, up from the 2 percent growth rate recorded in the third quarter.

You can probably guess what the net effect of this is. For the same quarter, the BEA reports that personal savings as a percentage of disposable personal income fell 0.6 percentage points to 4.3 percent. At year’s end, total personal savings in the U.S. — disposable income minus outlays — fell 11.8 percent to $545.1 billion as people drew down their savings to cover their holiday and winter expenses.

Now consider this: In 2012, Sen. Tom Harkin (D-Iowa), chairman of the U.S. Senate Committee on Health, Education, Labor & Pensions, released a report called “The Retirement Crisis and a Plan to Solve It,” which put the retirement savings gap at $6.6 trillion. Put simply, Americans are not saving nearly enough money and are woefully unprepared for retirement. According to Harkin’s report, half of Americans have less than $10,000 in savings.

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