A new US Savings bond may be just around the corner. This one will be designed to help with retirement. The US Treasury is considering offering “retirement bonds” to help American workers who are working for companies which do not offer a retirement plan.
According to a Treasury spokesman, the bonds would have the tax characteristics of an IRA and be eligible to be rolled over into an IRA once the savings reach a now-unspecified threshold. The bonds would also follow similar IRA rules from the standpoint that eligible purchasers cannot be currently covered by a retirement plan through work. An employee could have an automatic payroll deduction, similar to how workers save in 401(k) and other defined contribution plans. Risk adverse workers, who are uncomfortable investing in the stock market, would be the target audience for the new bonds.
This is not the first time the Treasury has issued retirement bonds. U.S. Individual Retirement Bonds were available from 1975 to 1982. Annual purchases were capped at $1,500 and the bonds could be held until the owner turned age 70 ½. A $500 bond purchased in 1982 would be worth a little over $8,000 this year.
These bonds would not be designed to compete with company savings plans. Part-time workers would be eligible to buy the bonds. Details have yet to be worked out, but it is widely expected that the interest rates would be reset regularly in a fashion similar to current savings bonds.
The government is concerned about the lack of savings and preparedness of American workers approaching retirement. The US Department of Labor has created an online course to help called: Taking the Mystery Out of Retirement Planning. The course has seven chapters and interactive worksheets to take you through the steps of calculating how much money will be needed and tips for how to save. The course is also available by calling (866) 444-3272.