By Justin Sink - 01/29/14 02:52 PM EST
President Obama signed a presidential memorandum ordering the creation of a new federally backed savings account on Wednesday, making official one of the biggest executive actions proposed in his State of the Union address.
Obama said the order would create “a new type of savings bond we can set up without legislation that encourages Americans to set up a nest egg.”
According to the White House, the “myRA” program would allow poor and middle class Americans to open a no-tax savings account for as little as $25. Contributions, which can be as little as $5 per month, would be made through automatic payroll deductions, and accounts would be portable, if workers change jobs.
“If you work hard all your life, you deserve a secure retirement,” Obama said.
White House officials say the modest savings accounts will open up retirement savings programs to the millions of American workers who don't have access through their employers. Since accounts will be federally backed — they will never lose money and not be subject to the maintenance fees imposed by many investment funds — even modest savings will grow.
“What I'm hoping is that working Americans will take a look because I want more people to have the chance to save for retirement through their hard work,” Obama said. “And this is just one step that we can take to help more people do that.”
The president's appearance at the U.S. Steel plant was the second stop in a tour touting proposals outlined in the State of the Union address.
Earlier in the day, Obama visited a Costco outside Washington, D.C., to tout his executive order mandating that federal contractors pay their employees at least $10.10 per hour — matching proposed legislation for a nationwide minimum wage hike.
On Thursday, Obama is expected to tout manufacturing initiatives at a gas engine plant in Wisconsin and education programs at a high school in Tennessee.