President Obama Outlines His New Retirement Program, Discusses Benefits

US president plans an executive order for his newly-announced "MyRA" retirement program.
3:00 | 01/29/14

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Transcript for President Obama Outlines His New Retirement Program, Discusses Benefits
This is a special room. Hello I'm tired and is -- New York this is an ABC news digital special report. President Obama delivered his fifth -- the union address last night and announced a major -- program for retirement savings. It's called an IRA it would provide investment accounts to millions of Americans backed by the federal government. That was just one highlight from the speech heavy -- to kick some life into the economy. Now with a full wrap -- last -- speech and what to look that what comes next it -- Dwyer let them attack how aria. -- Well President Obama just landed in Pittsburgh Pennsylvania he's on a tour right now -- steel factory there he's trying to build momentum for his economic agenda as you know begins this six year. And his tenure in the White House. America does not stand still and neither -- -- for President Obama now comes the hard part. Putting all those ideas into action and that she kicked off today at the popular discount chain Costco. Costco pays its workers more than four dollars above the federal minimum wage something President Obama wants more businesses to do to. To give them a -- she plans to issue an executive order. Raising pay for workers and all new federal contracts. I firmly believe it's time to give America a race. But many Republicans are opposed to writing a minimum wage of 1010 an hour into law here. The president's policies are making people's lives harder. They may find little common ground this election year but President Obama used his fifth State of the Union Address to keep hope alive he extended an olive branch to Republicans. -- of the market the speaker of the house. And told the inspirational story of -- wounded warrior an American hero. And like the army he loves. Like America he serves. Sargent first class quarry rams bird never gives up and he does not quit. One issue mr. Obama hasn't quit immigration reform Republican house speaker John Boehner says he's optimistic too. The house Republicans say they plan to unveil a new immigration proposal later this week. Meanwhile President Obama will continue on the stump he visits Nashville Tennessee and Milwaukee Wisconsin tomorrow to. -- and -- and the president says he's -- to circumvent congress on minimum wage at least for federal contractors do we know how many people that would involve. How many people would get a raise. Well there are a lot of details we don't yet know about this minimum wage executive order. We do know that it only applies to future government contracts the White House says they have not even signed that order yet that that will come in the next few weeks. Once it is signed we don't know how many people -- will apply to about two million. Federal contract workers perform public service is right now but for smaller number make less than ten dollars an hour time. All right and then there's also the issue of my IRA app program -- reading -- more about with our financial expert in a moment but from a political perspective. Can the president do this without congress and how are Republicans in congress reacting. -- the White House says that these new my IRA investment account hacked accounts will be created administratively by the Treasury Department. It's not going to be done through an executive order is simply an executive action in some of the regulations will be written that way. It was -- very kind of cautiously. Embraced by some Republicans last night senator Ted Cruz said that. Who would be opposed to encouraging. Americans to save more -- he was. Offered some tepid support there but of course all of this is in the details we haven't seen a lot of -- -- -- in ABC's Devin Dwyer thank you for joining us from Washington. And our joined by the host of the daily ticker on Yahoo! finance Aaron task and let's first hear from the president in his own words here's how he explained the admiring program last night. -- That's why tomorrow I will direct the treasury to create a new way. For working Americans to start their own retirement six. Mire entire -- -- It's -- it's a new savings -- that encourages folks. To build an aspect. My -- guarantees a decent return would no risk of losing what you put in. So my Harare -- industry we heard the president struggle with that pronunciation. -- get a reasonable good rate of return and no risk is this possible would be eligible for these things out with its server these. Questions we even know the answers to yet Aaron. Well there there aren't a lot of details as yet as -- mentioned in the president I believe is gonna make some more. Specifics on this later today reason Pittsburgh with the Treasury Secretary Jack -- but. You get on something it's very keen. -- guarantee greater return I'm not aware of any asset anywhere in the world where the return is guaranteed. Now there's this idea that US treasuries are a risk free asset because they're backed by the full faith and credit of the United States government. But it's -- not. Impossible that the US government to default on its debt at some point down the road so what sounds like they're -- -- are gonna create a new kind of government debt this new kind of savings -- he talked about. -- and it's -- guarantee you. Some return on your investment but again. There's no free lunch and there's no guarantees in life so I'm not sure how the president can actually see that -- have -- be true. And these are supposed to we presume. -- for people who have jobs that do not offer traditional higher air 401K plans. You know when we always have the fear that when that happens perhaps these companies will drop their plans given that city you know Americans can have another option elsewhere. -- so what do we foresee as some of the issues you know positive and negative with this type of program going forward. Right with the -- the positive is that it would be in a way forced savings plan. -- an American workers and you know we are not a nation of savers. There's some incredible statistics out there that 13 of Americans who are 55 years old -- 00 dollars and the retirement funds. And the -- retirement -- this country is less than 101000 dollars. Rated as you can imagine that that is not gonna get you very far. In retirement and so any program that does. Compel -- not force. Workers to save something anything -- if you -- even a couple bucks a week over the course. -- it's -- -- thirty year career at by the time you get done you'll have some chunk of money there so that is. In theory at least a positive thing. -- and I think that's what the president's ultimate goal is. The negatives are again I'm not sure you guarantee return anything right now and there are some small businesses who are saying that. It's one more regulation are gonna have to comply with -- -- -- to -- -- payroll. Functions in order to take this money out of out of your paycheck and set it aside. The government wants to make it very easy but it of the devil's always in the details and at this point we don't have any details so it's unclear exactly how this would work. And what burdens if any it would put on small business. Now of course you know given as the -- scary statistics you just mentioned in terms of American not saving for retirement. At the same time we're talking about people tying up their money in these retirement accounts we are aware how familiar you wanna take money and that -- doesn't matter. If you lost your job and you've got zero in your bank account -- -- going to be penalized again some potential tax implications. For the my -- program as well because they don't want people pulling out of it. But of course and the wasn't there is actually pretty that there will be no tax implications if the funds are withdrawn but again that's not official at this point. At least not coming directly from the White House -- also. The year's schedule the sketches that she's been the plan suggest that once you get up to 151000 dollars in your Myra -- -- You would then have to converted into a private sector Roth IRA where presumably. Presumably there would be -- if vacation if you withdrew before retirement age so. Again you know that a devil is in details there's a lot of moving parts here I think you know big picture. It's it's a good idea to. You make it easier for people to save because we're just not doing enough of -- in this country. And ultimately that is. Very expensive indeed Yahoo!'s Aaron -- thank you so much for joining us. Thank you and coming up next on ABC news digital President Obama himself he's got a speech in Pittsburgh just moments away we -- that streak alive. That. There's been an ABC news digital special. -- anti Hernandez in the U.

This transcript has been automatically generated and may not be 100% accurate.

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