Going from young and broke to retired and comfortable is a long, tough road.
So the Obama administration on Wednesday rolled out a simple, no-risk retirement account to help people start that journey. It's called the myRA — or "my retirement account."
President Obama first outlined this program in his State of the Union address last year.
Since then, his administration has been working with a few dozen employers to test what works.
Now, the myRA program is being rolled out nationwide. The accounts are designed to help people who lack access to a retirement savings plan at work, and can afford to set aside only small amounts of money.
The goal is "getting people into a cycle of saving," Treasury Secretary Jacob Lew told reporters on a conference call.
"MyRA has no fees, no risk of losing money and no minimum balance or contribution requirements," he said.
Traditionally, Americans could save without the help of their employers by using a tax-deferred individual retirement account, or IRA. But Lew said many workers are intimidated by IRAs, fearing such accounts would be too complicated or risky or loaded with fees.
Millions of Americans take advantage of employer-sponsored retirement plans, such as 401(k)s. But about half of all workers don't have access to such plans. That's largely because small-business owners say that creating and managing the accounts can be too costly and time consuming.
And there are other factors that discourage saving. Many workers cannot afford the minimum amounts required to open IRAs, or they may change jobs so frequently that they can't qualify for pension or 401(k) plans at the workplace.
The Federal Reserve estimates that nearly a third of workers have no pensions and no retirement savings.
Lew says the myRA could help. The accounts cost nothing to open and allow people to invest as little as $1. In addition, the accounts are "portable," that is, they follow workers as they move from one job to another.
The money would be invested only in a new type of U.S. Treasury savings bond created for the program. Those bonds are guaranteed never to lose money. The accounts are available for individuals who earn less than $131,000 a year, or $193,000 for married couples.
The Treasury says myRA accounts are structured like a Roth IRA, which means savers contribute money after income taxes are paid. But investment gains can build up tax free, and withdrawals are tax free in retirement.
People can contribute a maximum of $5,500 a year, or $6,500 for those 50 and older. The account can grow up to $15,000, or you can keep a lower amount for a period of 30 years. At that point, the saver must move the money into a Roth IRA.
Here's another attractive feature: Savers can withdraw money from their myRA accounts without paying any penalty at any time.
Employers can set it up so that workers could fund their accounts with automatic deductions from their paychecks. But an individual also could set up an account directly through the website www.myRA.gov and even fund it directly from a federal refund.
A website calculator says that if you put aside just $10 a week, within five years you will have saved up $2,745 — and established the habit of saving.
Lew said that's actually the most important thing: regularly setting aside money and watching it grow. "MyRA is designed to remove common barriers to saving, and give people an easy way to get started," he said.