"A warning on realities of work, retirement" by Deirdre Fernandes, Globe Staff November 30, 2014
Alicia Munnell has never been one to sugarcoat her opinions. As a top economist at the Federal Reserve Bank of Boston in 1991, she shook up the New England banking industry by documenting discriminatory lending practices.
As an official in the Clinton administration, she opposed the balanced-budget amendment because it would cut Social Security and defense spending. And as a researcher, she warned that government insurance designed to protect workers and their pension plans wasn’t adequate to cover funding shortfalls faced by struggling companies.
Now approaching 72, Munnell remains unapologetically blunt and this time her target is the US retirement system. “The idea that people can retire at 62 and walk around holding hands on the beach, it’s not realistic,” she said.
Where did all the money go?
Munnell, director of Boston College’s Center for Retirement Research, has completed a new book that concludes the golden age of retirement is over and Americans must adjust their practices and expectations. In the book, “Falling Short: The Coming Retirement Crisis and What to Do About It,” Munnell and her co-authors argue that retirement security in the 21st century means working longer, saving more, and passing fewer assets on to heirs.
Unless you are part of the 1%.
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If nothing is done, the book warns, “millions of retirees will find that they are too old to return to work and have little in savings — and no one to turn to for help.”
That scares me because it's me.
Munnell has studied pensions and Social Security since the 1960s.
Related: Pension board deficit of $62b sets a record
Looks like another bailout will be needed, no?
“People are not going to have enough money when they stop working,” Munnell said in an interview in her Boston College office. “We need to fix this. It’s really important.”
I already don't have enough, and I find it amazing that a person from the in$titution most re$pon$ible for wealth inequality -- the Federal Re$erve -- would now be saying things have to be "fixed."
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Munnell, who earned her doctorate in economics from Harvard University, gained a reputation as a firebrand in the late 1980s as director of research at the Boston Fed, where she was among the few women in top positions. She recalled high-level evening meetings ending with cigars passed around. She lit up, even though she didn’t smoke, to show she could fit in.
I'll bet she's a real looker.
But she wasn’t afraid to point out inconvenient truths and stand her ground. She was the lead author of a study that found systemic racial discrimination in mortgage lending among the region’s banks, which led to federal and state investigations into dozens of banks.
Yeah, she's a real trooper.
I'm sorry, readers, but I'm tired of apologetic mouthpieces for banks, no exceptions. I know if I were an elite of Bo$ton sitting down on a Sunday morning this is the kind of thing I would love, but that's not me.
But it hurt her chances to become president of the Boston Fed when Richard Syron left in 1994.
You hear any sirens, readers?
Banks and other interests upset by her work opposed her appointment and the Boston Fed’s board ultimately named Cathy Minehan, who retired in 2007.
Munnell, who had left Boston for the Clinton administration, remained in Washington, serving first as an assistant secretary of Treasury and later as a member of the president’s Council of Economic Advisers. When she returned to Boston in 1997, she accepted a teaching job at Boston College. A year later, with a federal grant, she helped launch the Center for Retirement Research.
“Falling short” is Munnell’s 23d book....
Oh, this is nothing but a book promotion posing as bu$ine$$ news.
By delaying retirement until 70 from 62, individuals can increase Social Security checks by 76 percent, she said. Working longer also delays spending retirement nest eggs while providing more time to save. Munnell and her co-authors propose raising the earliest age for collecting Social Security to 64 from 62.
“People need to understand that one of the most potent levers is staying in the workforce,” she said.
Talking down to us like a true elitist. I already understood that long, long ago.
My dream is to die on the job -- if I ever get another one.
One of the book’s more controversial recommendations is to use reverse mortgages, which allow seniors to take equity from their homes to pay for retirement. When they die or leave the home, the property goes to lenders.
I would say they are screwing seniors, but I know the Fonz would never lie to me.
Critics argue that these complex products target desperate seniors, who quickly burn through equity to cover long-term care costs and end up losing their homes because they can’t pay taxes and other expenses.
Don't lien on me!
Jack VanDerhei, research director at the Employee Benefit Research Institute, a think tank in Washington, said Munnell’s book doesn’t thoroughly consider the most appropriate steps for people based on their income and how long they might live.
At least the Globe makes you think.
For example, the costs of retirement are so high that reverse mortgages don’t always make a significant difference, he said. The number of middle-income retirees who will avoid running short of money increases by just 6 to 8 percentage points by tapping home equity, according to the institute.
So it may not be worth it for many seniors to take this risk, leaving them without a house to pass to their children, VanDerhei said.
But many retirees have few other sources of money and regulators have improved oversight of these products, said Munnell, who has advocated for reverse mortgages for several years (In 2012, she invested in and joined the board of Longbridge Financial, a New Jersey reverse mortgage company). For retirees who have enough savings to cover homeowners’ insurance premiums and property taxes, reverse mortgages may be a good option, she said.
To hell with you kids.
Munnell has been writing about Social Security and retirement for nearly five decades, and has no plans to stop working. She said she recognizes her book makes proposals that workers and policy makers may not want to hear. But the reality is retirement for this and coming generations has changed.
Workers are increasingly on their own and denying that — and failing to take steps such as working a few more years — will only lead to serious problems in the future.
We have known about that reality for a long, long time already.
“I’m less of a bomb-thrower the older I get,” she said. “But if I see something I don’t agree with, I still speak out.”
Little late, but....
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Why do they always look like real witches, readers?
