The Feds’ retirement program

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A new federal program could help you to start saving for retirement, but you shouldn’t expect huge returns.

Treasury Department created the myRA, which is a “starter” retirement savings account that will be available by the end of 2014 for workers whose employers don’t have their own retirement savings plan.

The myRA is a Roth IRA, which means that withdrawals upon retirement aren’t taxed. Contributions are invested in Treasury securities and can’t decrease in value. A myRA has no fees. Workers can enroll with a minimum contribution of $25 and add to their savings through direct deposits as low as $5 each payday. (For more information, go to treasurydirect.gov/readysavegrow.)

Workers earn the same variable interest rate as does the Government Securities Investment Fund, which had a 1.89 percent interest rate in 2013. Because myRA funds are invested in Treasury securities, returns will be low compared with, say, a low-cost stock-index fund, says Mike Piper, who runs Oblivious Investor and is the author of eight personal-finance books. “Hopefully, the guarantee against loss and the prospect of tax-free growth will be enough to get some people to start saving,” he says.