Abstract: This paper studies how default investment options generate market power in the U.S. retirement savings market. Focusing on Target-Date Funds (TDFs), the predominant default option in 401(k) plans, we show that the incremental fees TDFs charge over their underlying funds increased from about 4 basis points in 2010 to over 17 basis points in 2022. This increase is consistent with rising market power among TDF managers, who exploit fee-insensitive default investors. To quantify this market power and evaluate policy interventions, we develop and estimate a structural model of demand and fee setting in both TDF and non-TDF markets. Preventing price discrimination between TDFs and non-TDFs increases TDF investors’ welfare by $1.4 billion, with only modest reductions in fund manager profits.