Morningstar says 79 percent of Americans who follow this strategy avoid running out of money in retirement

As millions of Americans face the task of providing for their retirement, a Morningstar study finds that simplicity may be the key to financial stability in the years to come.

The investment research firm’s latest analysis of U.S. retirement outcomes suggests a simple plan can lead to a more secure future.

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The report finds that 79 percent of Americans who consistently participate in a workplace retirement plan for at least 20 years will likely have enough savings to cover their retirement expenses. The report comes at a time when fears of financial insecurity are widespread, with the study estimating that 45% of US households may face a deficit in their golden years.

“The model paints a clear picture,” said Spencer Look, associate director of retirement studies at Morningstar. “Participation in an employer-sponsored defined contribution plan significantly reduces the risk of retirement shortfall.”

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Workplace retirement plans are powerful tools, thanks to features like automatic savings and, in many cases, employer matching contributions. Over time, these factors combine to amplify wealth accumulation, capitalizing on compounding interest.

However, the study also exposes the divisions in retirement preparation between different groups. Single women, for example, are at greater risk of financial instability in retirement compared to couples or single men.

The research also highlights a gap along racial and socioeconomic lines, with Hispanic and non-Hispanic black Americans more likely to experience shortages than their white counterparts.

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The outlook is particularly bleak for those without access to workplace retirement plans. The study found that 57 percent of people who don’t participate in such plans may struggle to meet their retirement needs, compared with 21 percent of those who have been contributing for at least two decades.

Postponing retirement could be a strategy for those concerned about their financial future. Morningstar’s model indicates that delaying retirement from age 65 to age 70 reduces the risk of running out of money from 45% to 28%.

“It can be quite dramatic for people,” Look said. “Even part-time work, if you don’t have enough savings, can be a useful option.”

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According to CNBC, the findings come at an important time in America’s retirement landscape. As traditional pensions continue to disappear, more responsibility has shifted to individuals, leaving some generations – especially Baby Boomers and Gen X – more vulnerable to financial shortfalls in retirement.

The implications of the study go beyond individual savings. Morningstar researchers say expanding access to workplace retirement plans and increasing participation should be key goals for policymakers and employers.

They also suggest plan sponsors introduce features like auto-enrollment, student loan matching and emergency savings accounts to encourage greater buy-in.

As the retirement landscape continues to change, the faster and more consistently Americans can save, the better their chances of financial security.

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