Maybe you still need 1 character alive at the point when you choose 'retreat', but maybe not. The idea is that you sacrifice the items and phantoma you've gathered during the mission but get to keep your EXP when you retreat.

And in story mode the missions usually take a few hours because they're the 'dungeons' of the game. All wartime all the time.

Ohhh, bless easy mode! Maybe I'll finally beat the ending.