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OpinionThe Advisor's NoteThe Advisor's Note

Morningstar: Excluding long-term-care costs cuts U.S. retirement shortfall risk about 25%

Separate F&G and WTW surveys find 51% of pre-retirees plan semi-retirement and 36% of U.S. employees feel financially secure.

At a glance

20-second brief
  • Morningstar research puts retirement shortfall risk at 40%-45% of U.S. households, and removing long-term-care costs from the model lowers that estimate by roughly a quarter.

  • A separate F&G survey finds 51% of pre-retirees plan to semi-retire rather than stop working.

  • WTW reports 36% of U.S. employees feel financially secure, down from 46% in 2019.

Morningstar research puts retirement shortfall risk at 40%-45% of U.S. households, and removing long-term-care costs from the model lowers that estimate by roughly a quarter.

Long-term-care costs are the least predictable large expense in many retirement plans, so a client near the shortfall band can pass or fail depending on the long-term-care assumption.

A separate F&G survey finds 51% of pre-retirees plan to semi-retire rather than stop working. Semi-retirement changes the sequence of income, tax, and Social Security decisions, so the retirement-income plan needs to model a transition period with part-time earnings.

WTW reports 36% of U.S. employees feel financially secure, down from 46% in 2019.

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Sources & further reading
Morningstar research · F&G survey · WTW survey
In this storyMorningstarWTWF&G
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