By Don Kuehn

For millions of Americans, the market crash—and there's hardly any other word for it—means rethinking plans that had been blooming for a long time. After years of number crunching, paying down debt and counting the months to retirement, the debacle of 2008 has sent people back to the drawing board to rejigger their plans in light of the new reality.

That reality is that the value of 401(k) and 403(b) accounts, IRAs and personal portfolios has been decimated by factors far beyond our control. Some analysts point to the subprime lending fiasco that backfired into the worst housing foreclosure rate in U.S. history. (As I have noted before, a foreclosure on your block affects your home's value, even if you are current on your payments or even if you have paid off your mortgage.)

Others say the problem with subprime and other bad loans caused investment banks and other lending institutions to freeze in their tracks. That denied credit to even the most credit-worthy businesses and started a death spiral that had world economies circling the drain.

As property values drop, credit markets seize up and stock prices tumble, we now must scrutinize every decision that we used to be able to take for granted. Retirement, travel, vacations, college loans for the kids—they may never happen.

A recent news report noted that 137 private lenders have stopped making federal student loans. For many families, those loans were the linchpin of their plans to send their children to college.

In response, the government has taken steps to assure lenders that the hundreds of millions of dollars in student loans for this academic year are safe, and to push similar backing to the 2009-10 year.

The Department of Education and the Treasury Department both are players in this game, which includes loan purchases and pool investment programs. A third program, which would create "conduit" banks to further grease the skids under the loan programs in an effort to keep loans available and affordable, was unveiled in November 2008.

The details of the programs are way too complex to try to discuss here. If you are among the few who need to know the nuts and bolts of how the plan works, you probably already know more about them than I do.

Even parents who were socking money into a 529 college savings plan have seen those savings take a big hit. The risk of losses in 529s is not often mentioned in the hype surrounding these popular plans. The upheaval we have seen in the stock markets this past fall has affected 529 college savings plans just as it has hurt 401(k)s and 403(b)s.

Retirement security is clearly one—perhaps it's the biggest—casualty of this crisis. According to the Bureau of Labor Statistics, the number of people age 65 and older in the workforce was 6 million last year and will grow to 10.5 million by 2014. In a September poll by Associated Press-GfK, more than half the people surveyed worried that they would have to work longer than planned because the value of their homes and retirement savings had tumbled.

More than $2.5 trillion has been lost from retirement plans over the past year, including over $300 billion from public pension programs.

In reality, even before the crash very few Americans had done enough to save for retirement. Compared with other industrialized countries, the savings rate in America is abysmal.

Way too many people who work in the private sector seem to believe in a long-gone fantasy that they will somehow receive a pension that will protect them in their old age. That's just not going to happen. The days of the defined-benefit pension plan are going the way of the Grange. The onus has shifted to workers to save and invest in defined-contribution programs (like 403(b)s) to supplement any government retirement plan they may be eligible for.

Education workers should take a lesson from their friends and relatives who work in the private sector. Every person, everyone who works for a living and hopes to retire someday, must build a personal investment portfolio to supplement the retirement benefits they expect to get from the state. You never know when the bottom is going to fall out of your plans and circumstances can alter the realities you were building upon. Just ask former workers at Enron or Bear Stearns.

For teachers and other public employees, the picture isn't quite as bleak. But when housing slumps, property tax collections decline; when people feel poor, they spend less and, therefore, generate less sales tax revenue. As those revenue sources shrink, budget adjustments are going to be made in states and school districts across the nation. States will struggle to keep their promises to retirees, but there is every reason to believe that public pensions will be safe-barring some unforeseeable catastrophe.

It's not easy to plead the case for stock market investing when people have seen their net worth tank over recent months, but I am a staunch believer that somewhere in this market, we are going to see one of the greatest buying opportunities in history. The place to be is in the markets. Just when to buy, with how much and what to buy is still a murky picture.

If you want to see how the U.S. stock markets have recovered after big setbacks like October 1987, go to http://www.stockcharts.com/charts/historical. All things are relative, of course. Dow 9000 looked awfully good when we reached it for the first time in early 1998. The markets were soaring at the time, and it looked as though the sky was the limit. Dow 9000 didn't look so hot when we were skidding down after the big market crash of fall 2008.

It could take years for the markets to fully recover, and many of the companies that contributed to the big gains of the past 20 years won't be around to see the comeback. There will be consolidations, mergers, bankruptcies and takeovers in all sectors of the economy that will change the landscape of investing.

That's another reason to invest in no-load, low-cost mutual funds. The managers of those funds won't have all the inside information, but they'll have most of it before you do and will be in a position to act on it in a timely way to protect and grow your assets.

The bottom line is if you have a job now, keep it. If you planned to retire at the end of this year, don't be too quick to sign those papers. You might want to consider working a year or two longer.

Sure, you'll give up a year of "leisure," but you'll add a year of earnings and a chance to ramp up your savings. You'll boost your Social Security benefit and your state teachers retirement, and you'll give the markets—and therefore your investments—more time to recover from their collapse.

It's a new reality out there. The sense of financial comfort we all took for granted has been shattered, and it will be a long time returning. We will continue to see huge swings in stocks while credit markets, election results, and the effects of policy moves at all levels of government take hold. These swings will be gut-wrenching, but there will be better days ahead.

Take a deep breath and stay calm. It's your money (what's left of it), and you have to make the best of a really bad situation.

Don Kuehn is a retired AFT Senior National Representative. For specific advice relative to your personal situation, consult competent legal, tax or financial counsel. Comments and questions can be sent to dkuehn60@yahoo.com.