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Morningstar Retirement Launches New Morningstar Model of US Retirement Outcomes
Using the model, Morningstar researchers found workers without future defined-contribution plan participation are over twice as likely to run short of money
About this update from Morningstar, Inc.
[{"type":"text","content":"\nUsing the model, Morningstar researchers found workers without future defined-contribution plan participation are over twice as likely to run short of money in retirement\n\n\n CHICAGO--(BUSINESS WIRE)--\nMorningstar Retirement, part of Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, today announced the Morningstar Model of U.S. Retirement Outcomes — a simulation tool that considers individual characteristics, healthcare costs, and projected longevity to assess retirement income sufficiency. Through use of the model, the Morningstar Center for Retirement & Policy Studies published new research which examines potential retirement inadequacy among American workers.\n\n\n“The model paints a clear picture: Participating in an employer-sponsored defined-contribution plan significantly lowers the risk of retirement shortfalls,” said Spencer Look, the report’s lead author and associate director of retirement studies for the Morningstar Center for Retirement & Policy Studies. “Our model not only sets a new standard in retirement research, but we’ll be able to identify actionable insights for policymakers and plan sponsors to improve product design, all with the goal of helping more Americans reach their retirement goals.”\n\n\nThe research report, “Beyond the Retirement Crisis Headlines: Why Employer-Sponsored Plans Are the Key to Retirement Adequacy for Today's Workers,” suggests that certain demographics may be more likely to run short of money in retirement due to variables such as their current retirement savings, levels of financial resources, existing disparities in retirement account balances, and whether they participate in a defined-contribution plan. Takeaways from the report include:\n\n\n\nWhen comparing retirement funding ratios for Gen Z, millennials, and Gen X households in the United States, the research finds 57% of those who do not participate in a defined-contribution plan in the future may not be able to sustain projected retirement expenses, compared with 21% for those with at least 20 years of future participation. The career-long 401(k) participants who are at risk likely cash out their balances upon a job change or deplete their accounts via pre-retirement withdrawals.\n\n\n\nAcross the U.S., the model predicts approximately 45% of American households will run short of m...