Some examples of how to react to the crisis

BY KARIN PRICE MUELLER


PROFILE No. 3
Married couple, age 55, both work with total income of $150,000 a year and two kids, ages 19 and 16. They owe $75,000 on their mortgage. They plan to pay in full for college using 529 plans (balance: $100,000) and their home-equity line of credit. They would like to retire at age 60, and they contribute the max to their 401(k) plans and IRAs. The wife's company is talking about layoffs and she fears she won't get another job.

What they should do: "See if the bank will increase the line of credit to whatever is the maximum," Lynch says. "Always have access to the money in your home, especially if you think you may lose your job, because once you lose your job, it will be more difficult to get any bank to be willing to get you money." They should also establish an emergency fund worth $60,000.

What they shouldn't do: Sell out of everything. "Most people add risk by selling at the wrong time," Fraasa said. "If they are not very well-diversified, they need to consider making those changes now and position themselves for the long-term."