Apocalypse now

I finally steeled myself up and did it. I logged on and checked my 401(k).

It's down about 30% since I last checked in early September, which translates to a five-figure loss. The astonishing thing is that a whole chunk of that came this week. I knew in my brain that the markets got totally crushed last week - the Dow lost 18%, its biggest decline ever on both a points and percentage basis. But actually seeing more than $10,000 in paper wealth wiped out from my own accounts drives it home in a very visceral way.

It reminded me of two things.

First: I think the only thing for me to do is clench my teeth and stay the course. I haven't moved any money around. I'm not trying to time the markets. I have at bare minimum 30 years to go before I'm going to "retire" (which is kind of astonishing; I've only been in existence for 30 years. The entire span of my life is quite a long stretch still to come), and even if it takes a decade or two for the market to make up these losses -- which it very well might -- all the economic theories still say I come out ahead.

Two: 401(k)s only work as retirement plans if you manage the double trick of a) shaking off losses when you're young and investing aggressively, and b) switching to conservative, status-quo-preserving investments when retirement is imminent.

At my age, pulling out of stock-market-linked investments would be a mistake, all the experts insist. But if I were 63, or even in my late-50's and envisioning retiring within the next several years, staying invested in the market would be equally mistaken. When your retirement accounts cross the line from "investments for a far-off day" to "savings you will soon need to convert to cash," switching from volatile market-linked investments to conservative, funds-conserving ones is essential. Ditch stocks, move into bonds and T-bills.

The Washington Post has a great article that touches on all sorts of "eek look what the market did to my 401(k)!!!!" issues: "Retirement Wreck"

It's both interesting and scary to be living through the era of a giant economic experiment about whether 401(k)s and self-directed retirement systems are a smart move or not. Personally, I'm of two minds. I like having my retirement finances decoupled from a complete dependence on my employer. On the other hand, I think there's a lot of merit to the point raised in the Washington Post piece, regarding a study suggesting that defined-benefit plans outperformed 401(k)s in the past decade: "Pensions are managed by professionals with financial education and access to sophisticated investment tools. Indeed, part of the problem with 401(k)s, economists and advisers said, is that too many workers make bad investment decisions."

I'm not an investment professional. I make my living as a business journalist, my college minor was economics, I write this personal-finance blog, and still, I don't consider myself any kind of investments expert. Expertise is a hard thing to develop, and I'm dubious about the notion that the expertise needed to successfully run a personal 401(k) and save enough for retirement is something every single adult should have.

Still, I'm reminding myself: My 401(k) is a long-term investment. Volatility is an inseparable element of upside. Breathe in, breathe out, and remember that economic theory says that what happens in a week, or a year, shouldn't matter when your investment timeframe is 30 years.

But just how bad is the current economic mess? Two things from the past week stick in my mind.

First: I've had three friends laid off in the last week. Companies, especially small ones and startups, are clamping down hard. I don't think this downturn is going to be short or shallow.

Second: Another friend has spent the week at the local hospital, the one 15 blocks away with an ER I know all too well. Her partner had a stroke. He's uninsured. He's 44. I have to believe he's going to recover and be OK, because I can't quite fathom a world in which he isn't.

This is a very unpleasant and scary reminder that "will I have enough money when I retire in 30+ years?" or even, as the issue is for so many people, "will I have enough cash to pull through right now?" is not the most terrible problem to have. Finances matter, a lot. But being alive matters more. Every moment you have to breathe and experience and be with those you love and do the things you care about is valuable. Use them.