“You can’t eat your house a sandwich at a time,” she says.

This interview has been edited and condensed for clarity.

BARRON’S:For a lot of Americans, their house is their retirement plan. Is that wise?

GHILARDUCCI: It’s not a great retirement plan at all. For instance, let’s say you own your house, and you have Social Security. You are going to have to live only on Social Security, because you can’t eat your house a sandwich at a time. And also, your house will often be a liability as it needs continual repair. You still need money to pay your taxes. As every homeowner knows, even though you paid it off, it isn’t free.

But is paying off your house a form of saving?

Absolutely. If you don’t manage your debt, it is as bad as not saving. If you pay off your debt, that’s the same thing as saving. If you’ve maxed out on your 401(k) and you want to know where else you can shore up my finances, pay off your house. Because that is an asset. Now, it’s illiquid, and it kind of sits there, and you partly consume it, but it’s also an asset. And if people can come into retirement with their home paid off, they are a lot more secure than if they still have a mortgage.

What are your thoughts on reverse mortgages, where you give up equity in your home (while still living in it) in exchange for receiving regular payments?

I recommend that only for very high-income people who have a lot of flexibility. I am not a fan of the reverse mortgage industry. The industry [knows that] a portion of people will default and have to give their house wholesale to the reverse mortgager. They could foreclose on you and kick you out. It’s not good to plan on a reverse mortgage.

How much do you need to retire? Find out why $1,000,000 is not enough. (Click the picture for more)

What about people planning to sell their home and get a lump sum they can convert into an annuity?

Annuities can be hard to understand and hard to swallow. The annuities on the private annuity market are too expensive for individuals. You are going to have to pay a lot to be guaranteed income for life. And variable annuities are a predatory product and should be avoided. Anybody who talks to you about variable annuities isn’t a friend.

A better option is to just follow a structured withdrawal [from your investment accounts]. The rule of thumb has been 4% every year. If you just withdraw 4% and live on that, you’ll be OK for the rest of your life. Well, returns have fallen a little bit, so [now] 3 1/2% withdrawal is a good rule of thumb. So you can create your own annuity without having to pay an insurance company a huge amount of money.

And the idea with that is, you have this lump sum, and it throws off cash, and if you stick to withdrawals of 3 1/2%, you don’t need to spend down the principle?

Well, you probably will. As you move your assets into safer and safer accounts, they probably will just give you maybe 2 1/2%. If you don’t have a bequest motive, like you want to leave all of your principle to your kids or the charity down the street, you’re going to want to eat into your principle a little bit. So plan your withdrawals at 3%, maybe a little bit more if you’re older and you still have a good nest egg. But try to eat into your principle as well as just living off the interest.

The median home price in the U.S. is about $240,000, which is actually close to what most Americans say they hope to have saved for retirement. But is that enough to fund a 30-year retirement?

Not for most people. If you’re [retiring at] 65 or so, you should have about eight times your annual salary. So the median earner now makes about $42,000, so that’s about $340,000. And that’s above and beyond Social Security. But this is fantasy. Only about 4% of the population reaches 65 with eight times their annual salary.

Oof, that’s depressing.

To save for retirement is a very slow process. The sooner you start, the cheaper it is, because you will be accumulating interest. You also have to take into account human behavior. You’ll get in the habit of doing it. You’ll be rewarded as it grows. You’ll feel good. You have to make sure that by the end of the day, no matter what happened to you in your work life, or as you were working, that you are secure at 65. The way to pay off your debt and save for retirement at the same time is to reduce your current consumption.

Saving for retirement is a lot simpler than solving health care problems, going to the moon, or even figuring out what home insurance to buy. It’s a lot simpler. It’s just a matter of making the money work for you over a long period of time.