A little skit ran through my head the other day…
The house lights dimmed and the bright American flag glistened in the background. The crowd hushed as a tall man in a strange costume strode confidently onto the stage.
Curly turned to Larry and Moe and exclaimed, "Oh my, that's our favorite—Uncle Sam, our boyhood hero." Moe put his finger to his lips as if to say "Shhh!"
Uncle Sam rapped the microphone with his fingernail and the sound echoed throughout the hall. He then bellowed out, "Hello, my fellow Americans!" and the crowd cheered wildly.
He continued, "Today I want to announce the deal of a lifetime. We all know that IRAs and 401(k)s are tools greedy rich people use to save for retirement. I'm here to announce a new retirement program for everyday, ordinary people. Everyone should have the right to retire safely and with dignity, and that is what we are going to do for you."
Uncle Sam paused until the applause died down.
"Today we have introduced a new retirement program called myRA. It's pretty simple. Your employer can withdraw as little as $5 from your paycheck, and it will be invested in a new government bond that will earn the same variable-rate interest as those available through the government Thrift Saving Plan Government Securities Investment Fund (G fund). If you change jobs, it is totally portable. You can take it with you.
"While the final details are still being worked out, you can invest your money into safe, interest-bearing bonds and let it grow tax free. And the best part is: when you take your distribution out, you don't have to pay taxes on it either.
"So, there you have it! You can have money taken out of your paycheck in small amounts. It will be invested in variable-interest government bonds paying a good return, and it will be there for your retirement along with Social Security, TAX FREE! Don't ever say Uncle Sam isn't looking out for you.
"I know everyone is anxious to get started, but I will answer some questions now. Please raise your hand."
Curly raised his hand and Uncle Sam pointed in his direction. "You, baldy, what's your question?"
Curly cleared his throat and asked, "It looks to me like the government is acting like an insurance company. We give you our money and you look after it for our retirement. Is that correct?"
"Exactly right," Uncle Sam responded. "Who else can keep money as safe as the US government?"
Curly, Larry, and Moe looked at each other quizzically.
Moe raised his hand. Uncle Sam spotted him and said, "You, mop head, what is your question?"
Moe said, "The national debt clock shows the government already has over $128 trillion in unfunded promises to others. How will our money be invested? Will it be used to make good on promises already made to other people?"
Uncle Sam paused for a moment and said, "Those details will be worked out. While that may happen, younger people will take part in this program too, so they will help pay for your retirement when the time comes."
Moe could barely contain himself. "Isn't that a Ponzi scheme? I thought they were illegal?"
Uncle Sam paused and said, "Ponzi schemes are illegal, unless they are run by the government. What's your problem? I mean, come on! Doesn't everyone trust the government?"
51% of the audience cheered wildly while the other 49% remained silent.
Larry, not wanting to be outdone by his friends, raised his hand.
"You, half-bald mop-head, what's on your mind?"
Larry replied, "I have a two-part question. Why not use a Roth IRA instead? Aren't they available to everyone? Also, can't all self-directed retirement plans invest in government bonds now if they want to?"
Uncle Sam's face grew red as he responded, "Obviously, you don't get it. Nothing is safer than a retirement program totally invested with the government. You earn a decent yield without any worry."
Larry shouted, "Wait a minute! The government has already made over $128 trillion in promises it cannot keep. Now you want us to invest our money with you, at an interest rate that you control? What's the catch?"
Uncle Sam's face grew bright red as he exclaimed, "Everyone knows the government can do a better job of looking after your money than you can. You guys are just a bunch of stooges. This program is so good, but you dummies are too stupid to see that!"
Curly turned to Larry and Moe and said, "When Uncle Sam calls it an myRA he is right. 'My' means it is his. We may be dumb, but we are not that stupid. This is a terrible idea. They are just trying to grab our money so they can keep buying votes in the next election. I am not touching it."
"I heard that!" Uncle Sam screamed. "You are the kind of people who have torn America apart—greedy, selfish, and without compassion for the little guy. Audience, you heard them. Don't you agree?"
51% jumped to their feet screaming wildly while the other 49% sat silent. Once the noise died down, Larry uttered through the microphone, "It sounds to me like another money grab. We might be better off just leaving the country."
Uncle Sam realized this was an argument he had to win. "Look, you un-American radicals! We don't want your kind in this country. Those values have no place in a modern society. Go ahead! Get the hell out of here! Just leave your money behind. Audience, don't you agree it is time to tell those greedy buggers to hit the road? If they don't want to share, let them go elsewhere. I am sick of their selfish ways."
Again, 51% jumped to their feet screaming wildly, glaring at Larry, Curly, and Moe. The screaming would not stop. 49% quietly headed to the exits with the three stooges leading the way. Moe, speaking in almost a whisper, commented, "It seems the real stooges are the ones who fall for the scheme." The 49% nodded their heads in silent agreement.
Personally, I am a registered independent and have been for over 50 years. Both political parties have pushed the government to make $128 trillion worth of promises—with our money—that it cannot afford to pay. What a terrible burden to place on future generations!
Our national debt clock shows government liabilities of $1.1 million per taxpayer. They spend our money to buy votes to stay in power. The system is beyond repair.
Humor is a good outlet to help work through issues that might otherwise drive my blood pressure—and yours—to an all-time high. Here's the scary part we cannot laugh away: myRAs are real.
My advice: Just say no to myRA and open up a Roth IRA instead. You receive the same tax benefits but more options to invest your money ahead of inflation so you can actually enjoy retirement. Snake oil is snake oil, no matter how you try to package it.
As a person who has spent the last several years trying to help people understand investing so they may retire comfortably, I become more frustrated with the government every day. No one needs a myRA when they can invest in a Roth IRA with the same benefits but greater flexibility.
There are many ways for folks to save for retirement without turning to the government. After all, most realize it isn’t prudent to seek financial help from the most broke person (or entity, in this case) around. My weekly column, Miller’s Money Weekly, offers insights into alternative ways to protect and build your nest egg. Best of all, it’s free. Sign up today to receive articles like the one you just read and other actionable advice.