Then, one day, someone just showed up at their house to buy it. "Normally I would have said no," Munnell said. "And we could've been fine in that house for a good number of years. But because I did that [budget] exercise, I took advantage of the opportunity when it arose." The couple still lives on Beacon Hill, but in a co-op, and they have no debt on either that or a house they own in Vermont.
Smart Thing No. 2
Working longer is a solution to inadequate retirement savings that Munnell is passionate about. It helps you postpone taking Social Security and get a far bigger monthly benefit, and it allows tax-deferred retirement savings to grow. What both of her smart retirement moves have in common, she stressed, is that neither had anything to do with investment options.
"One was controlling your spending, and the other is a labor force decision," she said. "If I have a message, it's that I'm stymied like everyone else about how to invest my money, but for one reason or another I made good lifestyle decisions that saved me."
The Not-So-Smart Stuff
Most of Munnell's mistakes involved using retirement savings for current lifestyle needs. When she worked at the Boston Fed, she had a defined-benefit pension plan, now a coveted rarity. When she left that job to work in Washington, she asked a neighbor there whether she should take her benefits in a lump sum. He said yes, that she could invest it and make more money than if she left it in the defined-benefit plan.
Wrong. She spent it all. She wasn't buying anything particularly lavish, but she and her husband were maintaining two homes. "I should have just left it in there, and it would have turned into a meaningful amount," she said.
She also tapped the money in her 401(k) plan at the time, albeit from her after-tax 401(k) savings. "I used my after-tax account like a bank account," she said. "I was a little cavalier. I'd tell anyone else not to touch it, ever."
Another, smaller regret is moving money out of the government's thrift savings plan. She wanted to consolidate her accounts in one place to get a better feel for her asset allocation. "I'm not happy I did that," she said. "It has such low fees."
The Bottom Line
Munnell spends a lot of time thinking about other people's retirement rather than her own. She worries that a whole cohort will arrive at retirement without enough money to live comfortably. Instead of fretting over whether you should be in stocks or bonds, she recommends people focus on the things they can control, like their lifestyles.
For many people, that won't be enough, and Munnell says a lot needs to be done on the policy front. That's why she keeps working.