Legislators have long hoped to help more Americans save for retirement. One solution on the table: the Retirement Savings for Americans Act.
The bipartisan legislation, introduced to Congress in 2023, would create a federal workplace retirement account for workers, similar to a 401(k). Like other workplace retirement accounts, this plan would come with tax advantages and give investors the choice to invest in a menu of mutual funds, including target-date and index funds.
Such a plan would undoubtedly improve outcomes for those who wouldn’t have otherwise have access to workplace retirement accounts, a recent study from Morningstar finds.
But the legislation would come with a major unintended consequence: a decrease in long-term wealth for many young working Americans. Researchers say the majority of working Americans would be better off with the current system.
Overall, under the RSAA, Morningstar’s model estimates that wealth by retirement age could decrease by up to 12% for millennials and 20% for Gen Z workers.
Here’s a quick rundown of the proposals:
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