The MyRA retirement account, according to the US Treasury is “designed to help savers start on a path to long-term saving and serve as a stepping stone to the broader array of retirement products available in today’s marketplace.” If not used as intended however, it could be a crutch rather than a stepping stone.

Here are some of the proposed benefits:

You can start small. The initial investment is just $25 and additional contributions only have a minimum of $5.  Many of the traditional investment vehicles used for IRA investments generally have minimums of $50/mo. As a stepping stone, the low entry point could be advantageous to low, middle-income workers and part-time employees.  Anyone focusing on other financial goals such as building their emergency savings or getting out of debt could use MyRA to at least get a toe hold into saving for retirement.

The danger, of course, is complacency.  Workers may simply assume that because they are saving, they are on track to retire, but then may fall short.  According to Professor AnnaMaria Lusardi at George Washington University, people who ran retirement calculations saved considerably more for retirement than those who didn’t.    So anyone using a MyRA account and starting small would be well served to also run a retirement calculation each year and to increase their contributions at regular intervals.  The total (not annual) contribution to MyRA caps at $15,000 so running a calculation could encourage workers to move beyond this account to save more for retirement.

You can deduct funds from your paycheck.  Granted, anyone currently investing in a traditional or Roth IRA can most likely set up an automatic investment from their bank account.  The deduction can come out the day (or the day after) their paycheck hits.  The question, however, is will they?  According the Secretary of the Treasury’s research on the subject, most people don’t. Even if they are eligible, they don’t invest outside of their employer plans.  “Approximately 9 out of 10 workers automatically enrolled in a 401(k) plan continue to make contributions to that account compared to the less than 1 out of 10 eligible workers who voluntarily contribute to Individual Retirement Accounts.”

Payroll deduction savings for retirement is probably the best benefit of MyRA.  The danger here is if employees don’t have emergency savings, they will raid it since the amount invested can be withdrawn without a penalty.

Employers can auto-enroll employees in MyRA. Correction & update:  According to Treasury spokesman Brandi Hoffine, reached  after this post was initially published, employers will not have  the option of automatically enrolling workers in MyRA. (Auto-enrollment is, however,  a feature of a separate proposal by the Obama Administration —one that would require Congressional approval.)  Research has shown that auto enrollment has increased participation rates in 401(k) plans. However, on the flip side, the average contribution percentage is lower when an employee enrolls with the default option rather than choosing their contribution.  A 2013 study on How America Saves by Vanguard, reported that the average participation rate for employees who were enrolled with auto-enrollment was 6.6% and with voluntary participation 7.5%.

The principal is protected. Savers will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan (TSP) Government Securities Investment Fund.  The danger is workers who only invest in low interest bearing accounts over their lifetime need to save a higher percentage of their income for retirement.

There are tax benefits. The tax benefit of the account would be similar to the Roth IRA and the contributions could be withdrawn penalty free. This is a double edged sword – the principal is accessible which can encourage some people to save who wouldn’t otherwise but the tax benefit is only realized on the earnings in the account. If you withdrawal the principal, you aren’t maximizing the tax benefit.

The MyRA account makes sense when used as a stepping stone to get workers who normally wouldn’t be saving to put funds away for retirement into the “broader array of financial products available in the marketplace.” The main problem I see is there isn’t a mechanism in place, as far as I can tell, to transition workers to take that next step.  For example, a college student going to a community college has a clear path to matriculate to a four year college. It’s all laid out what coursework they need to take and students have plenty of guidance along the way.  MyRA may be a stepping stone, but workers need a path to the next step.

MyRA needs to be coupled with mandatory financial education around what workers need to know to invest for retirement. This could include how to run retirement calculations, investment education and showing the value of increasing contributions over time.  Then employees would have the tools to use MyRA account as a true starting point to retirement security.  Access to a retirement account through payroll deduction is helpful. Couple it with financial education and it could be powerful.

Nancy L. Anderson, CFP ™ is a Certified Financial Planner ™ professional in Park City, Utah and a blogger for Deer Valley Ski Resort.  Follow Nancy on Facebook – Twitter.