Morningstar Simulation Projects Strong Saving Gains From Federal Roth Auto-IRA

Despite decades of growth in defined contribution plans, and the more recent expansion of state-facilitated retirement program for private-sector workers, millions of workers still lack access to a workplace retirement savings vehicle.

Morningstar released a report today revealing billions in retirement savings gains that could come from a potential federal auto-enrollment plan for the approximately 32.3 million workers currently without access to a plan. The firm used its Morningstar Model of U.S. Retirement Outcomes to simulate the effect of automatically enrolling workers who lack access to an employer-sponsored DC plan or a state auto-individual retirement account into a new federal retirement plan, structured as a Roth account and subject to existing IRA contribution limits.

According to the results of the simulation, over a 10-year horizon, a federal Roth auto-IRA would add between $635 billion and $938 billion in retirement savings to participants.

The figures rose to between $981 billion and $1.35 trillion when combined with an enhanced Saver’s Match: a voluntary program that offers a direct federal contribution of up to $1,000 deposited directly into a low-to-moderate-income taxpayer’s individual retirement account or retirement plan. Enacted as part of the SECURE 2.0 Act of 2022, the Saver’s Match is scheduled to begin on January 1, 2027.

“There is real interest that something like this [federal auto-IRA] may make its way into future legislation,” says Spencer Look, an associate director of retirement studies in Morningstar’s retirement group and one of the authors of a report on the study’s results.

As an example of a federal solution, Look points to the Retirement Savings for Americans Act, which would offer a federally run retirement savings plan to low- and middle-income workers with no access to an employee-sponsored plan.

This bipartisan bill was originally introduced in 2022, re-introduced by Representative Lloyd Smucker, R-Pennsylvania, and Representative Terri Sewell, D-Alabama, in April 2025 and referred to the committees on Ways and Means and on Education and Workforce. There is a companion bill in the Senate sponsored by Senators John Hickenlooper, D-Colorado, and Thom Tillis, R-North Carolina.

If passed, eligible workers would be automatically enrolled in a new “American Worker Retirement Fund” at 3% of their income, with an option to opt out or increase their contributions.

In Morningstar’s simulation, auto-enrollment at a 3% baseline yielded sizeable savings, Look says. Another plan design Morningstar considered, auto-enrollment at 3% with escalation to 6%, yielded a 44% increase in savings among the plan designs and age cohorts the firm analyzed. Enrollment at a 6% default savings rate was found to produce a 49% increase in retirement savings, for those eligible under the proposal.

Morningstar found the benefits of the proposal were concentrated among those with the “most to gain.” Single women, members of Generation Z and Millennial workers, lower- and middle-income workers, Hispanic workers and non-Hispanic Black workers would see the largest increase in retirement savings.

In addition, a Saver’s Match simulation found that restricting participants’ access to their match funds until age 62 would increase aggregate retirement savings by 35% to 56%, up from 28% to 49% under the baseline, non-Saver’s Match scenarios. Expanding eligibility and doubling the match rate to 100% on the $2,000 in contributions eligible for matching increased gains to between 59% and 77%, with more dramatic gains projected for lower-income and younger workers.

Morningstar reported last year that the Saver’s Match has the potential to significantly improve the retirement savings of low- and middle-income workers, projecting mean increases of up to 12% overall. Single women, Black Americans and Hispanic Americans stood to benefit disproportionately, as well as workers in industries prone to higher income inadequacy.