Just because you have a Ph.D. in economics doesn't mean you know how to invest for retirement.

Alicia Munnell, the director of Boston College's Center for Retirement Research, was a member of the president's Council of Economic Advisers for two years before joining Boston College as a professor of management sciences in 1997. Before the council, she was assistant secretary of the Treasury for economic policy for two years. That was after working for the Federal Reserve Bank of Boston for two decades. That was after getting her Ph.D. at Harvard.

But taking responsibility for your own investing is "too hard," she says. Like everyone else out there, Munnell, 72, is nervous about whether she's doing the right thing. She did make a couple of smart financial decisions in her early 50s that firmed up her financial footing. They had nothing to do with stocks or bonds.

Now Munnell tries to help people learn from her mistakes by talking about them as often as possible. The "not-so-smart things," she calls them.

The Situation

Munnell and her 76-year-old husband, Henry Healy, a lawyer, both still work. She analyzes retirement issues, works on papers, writes a retirement blog, and suggests changes to policy. You don't get rich in academia, but "you get in benefits what you don't get in salary," she said. She loves working and has no plans to stop, though she has broadened her interests in recent years. She's taken up duplicate bridge, plays in tournaments, and daydreams more about such things as cruises down the Danube.

Munnell says that like many people she probably has too much money in cash—-she guesses she has a third in cash, a third in stocks, and a third in bonds. She'd have much less in stocks if her son weren't a private wealth manager at Goldman Sachs. "He probably got us out of hoarding our money under the mattress," she said. "He only intervenes when he's kind of horrified."

Smart Thing No. 1

One Sunday in the mid-1990s, when she was around 50, Munnell began to wonder about how much she and her husband were spending and how much they might have to live on in retirement. This was after she worked in the Clinton administration and was back in Boston looking for a job. She looked at their earnings, savings and mortgage payments to get a rough idea. The result: a "mind-boggling mismatch" between the money they needed to maintain their present and future lifestyles.

One of the couple's major assets was a stately home on Boston's Beacon Hill. It was a "huge single-family house with six bedrooms and a garden," Munnell said. "We could've had people living upstairs and would never have known it." She and her husband talked with a financial planner she knows from her work at the center, who emphasized that they had a budget constraint and needed to set up their budget to reflect that. In other words, get rid of the house.