06.01.26

Research Offers Retirement Prep Advice

by: Zoe Sagalow

Research from Morningstar Investment Management shows that while essential expenses generally decline in retirement, they rise as a share of income — from about 40% to 60% — as retirees rely on fixed resources and face rising costs later in life. The study finds that health care and long-term care expenses are especially important risks, with costs often spiking in early retirement and potentially becoming difficult to predict or fund over many years. Researchers recommend that retirement plans use stable income sources for necessities and be stress-tested against higher-than-average expenses, including medical shocks and housing needs. Advisors are encouraged to incorporate detailed, real-world data rather than averages alone, since average assumptions can underestimate true financial needs. The findings also highlight the psychological side of retirement planning, noting that anxiety about running out of money is common even among wealthy clients, making clear communication and realistic planning essential.

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