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A Harvard Economist Screwed Up
Old 07-17-2015, 09:27 AM   #1
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A Harvard Economist Screwed Up

Interesting piece on Alicia Munnell's personal experience with retirement planning.

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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.
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Old 07-17-2015, 09:46 AM   #2
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I consider myself the poster child for screw ups in retirement investing. However, I've been a good saver. This lady seems to have done neither of these correctly - investing OR saving. The fact that she and her husband both w*rk is probably the only reason they will have enough. I'm not being critical as such, I just don't see much to learn here. I already know how to do it wrong! The fact that a Harvard economist screwed up is not particularly a surprise. I have friends and acquaintances who are much smarter than I and received larger salaries who are now struggling with retirement decisions because they did not plan well. YMMV
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Old 07-17-2015, 10:06 AM   #3
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If it weren't for her son prodding, this woman would not have invested in stocks, and just kept her money under the mattress. She lived large in a big expensive home, and appeared to not understand budgeting. When changing jobs, she cashed out her retirement funds to spend. It goes to show they need to teach more about lowly home economics than whatever fancy theories they have in these Ivy League schools.

And she is still working now in her 70s, because she says that "a lot needs to be done on the policy front". I wonder what damages she had done in her previous jobs at the Federal Reserve, as assistant secretary of the Treasury for economic policy, and member of the president's Council of Economic Advisers.
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Old 07-17-2015, 10:18 AM   #4
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I guess this woman is one of those do as I say... not as I do types.

But that gets me to thinking... since she and her husband are both over 70.. are they drawing SS or not? If they are, then between work income and SS income they are probably paying a lot in taxes.... if they are not drawing then that would seem stupid since their benefit isn't growing and they are foregoing income.
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Old 07-17-2015, 10:52 AM   #5
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Quote:
Originally Posted by ronin View Post
Interesting piece on Alicia Munnell's personal experience with retirement planning.



how-a-harvard-economist-screwed-up--and-then-saved--her-retirement
While she received her PhD from Harvard, she works at Boston College, not Harvard. It is not clear that she ever has worked for Harvard. So I would say that she is a Boston College economist, not a Harvard economist.

She is excellent, I hope she is happy to continue working.

Ha
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Old 07-17-2015, 11:06 AM   #6
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I don't think this person and her DH are working because they have to.
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Old 07-17-2015, 11:30 AM   #7
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I consider myself the poster child for screw ups in retirement investing.

...
Up until the last ten years or so I would probably be on the poster with you...
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Old 07-17-2015, 11:43 AM   #8
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Weird article. Professor sells her SFH on Beacon Hill in the mid-90s, missing the huge run-up in value -- and that is a smart thing?
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Old 07-17-2015, 02:27 PM   #9
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I'm guessing that the property taxes and upkeep on the place were more than their income could handle, which makes appreciation not-so-relevant.
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Old 07-17-2015, 02:52 PM   #10
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If it weren't for her son prodding, this woman would not have invested in stocks, and just kept her money under the mattress. She lived large in a big expensive home, and appeared to not understand budgeting. When changing jobs, she cashed out her retirement funds to spend.

<SNIP>
While keeping too much in cash can lower expectations in retirement, the other two things NW-Bound mentioned (spending large and pulling retirement funds to spend) are the biggest culprits - not budgeting is probably how she got there. Bad as a mattress is, at least you have the inflated money left if you can hold off spending it. Had she left her qualified money alone AND lived in a condo all along, she would have a very lumpy mattress indeed. YMMV
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Old 07-17-2015, 02:55 PM   #11
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Not enough detail in the article to know why she sold, but she sure missed a whole lot of appreciation by selling when she did. I still find it odd that, her other financial issues aside, the author believes it was a 'smart' decision to sell before the run-up.
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Old 07-17-2015, 03:14 PM   #12
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Not enough detail in the article to know why she sold, but she sure missed a whole lot of appreciation by selling when she did. I still find it odd that, her other financial issues aside, the author believes it was a 'smart' decision to sell before the run-up.
And of course, like everyone else, she knew that the run-up was just around the corner.

Ha
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Old 07-17-2015, 03:14 PM   #13
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Read the article this morning and my first thought was that she shouldn't be involved in setting any finance or retirement related policies. What qualifies her


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Old 07-17-2015, 03:20 PM   #14
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Read the article this morning and my first thought was that she shouldn't be involved in setting any finance or retirement related policies. What qualifies her


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Old 07-17-2015, 03:34 PM   #15
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I don't think this person and her DH are working because they have to.
Exactly. She didn't screw up, not enough to matter anyway. That part of the title is there to make you click through to read the article. She could've done better, true, but she's doing just fine. She has enough. Always did. Still does.
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Old 07-17-2015, 06:15 PM   #16
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Exactly. She didn't screw up, not enough to matter anyway. That part of the title is there to make you click through to read the article. She could've done better, true, but she's doing just fine. She has enough. Always did. Still does.
Indeed. It is unlikely anyone will find them living in the van down by the river.
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Old 07-17-2015, 06:27 PM   #17
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Indeed. It is unlikely anyone will find them living in the van down by the river.
They will probably find them dead at their desk at work.
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Old 07-17-2015, 06:30 PM   #18
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It's not that they are working themselves to death that concerns me.

It's that I am afraid of whatever public policies they are thinking of to save retirees like us from ourselves. Can they leave me alone, or let it be, please?
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Old 07-17-2015, 07:38 PM   #19
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This article made me think that boston academia is merely a sanctuary for the feeble minded.

Would folks be as forgiving if an electrician wired her own house and it burnt down immediately after turning on the juice? not the best analogy, I know, but pretty close, right?
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Old 07-17-2015, 08:16 PM   #20
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It's not that they are working themselves to death that concerns me.

It's that I am afraid of whatever public policies they are thinking of to save retirees like us from ourselves. Can they leave me alone, or let it be, please?
+1

For example, I'm not interested in a new gov't mandated retirement program
'The Nation Requires a New, Mandated Tier of Retirement Accounts': Alicia Munnell, director, The Center for Retirement Research - Bloomberg Business
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