By Justin Sink - 01/29/14 04:29 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.
“I want more people to have the chance to save for retirement through their hard work,” Obama said in Pittsburgh, where he made the announcement from a steel plant.
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. Because 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.