America's Credit Catastrophe

Before doing anything drastic, a plan is in order. Johannessen suggests investors identify how much they'll need each year in retirement, then stash away five to eight years' worth of cash needs in safe investments (such as short- and intermediate-term bonds). But if you do want to pull some money out of the market, he says you shouldn't do it all at once; a better idea is to spread it out over a few months: "You never want to be selling into a 7.7 percent down day." Though for stock buyers, such drops serve as screaming opportunities.

Even if investors are already in retirement—especially those who are looking at a potential 20- to 30-year timeline like Meyer—it's a good idea to leave a large chunk of money in the stock market. That's because bonds' after-inflation re-turns are pretty puny. (Since 1926, bonds have produced an average annual return of just 2 percent after figuring in an annualized 3 percent for inflation, according to Morningstar.)

Assuming a diversified portfolio, investors might not want to change anything, says Gary Hager, founder and chief executive of Integrated Wealth Management in Edison, N.J. "The sky is not falling. There's an incredible amount of emotional noise on the street right now. In 20 years, this is the most scared I've seen people," he says. Hager recommends investors devote a slice of their investments to alternative asset classes, such as commodities or metals, which add some insulation in volatile markets. "If the market does nothing but go down, your portfolio will still suffer, but it'll be nowhere near the suffering if you just have stocks, bonds, and cash." - Katy Marquardt

The Small-Business Owner

While a lack of liquidity in the commercial paper market is making a mess of funding for some Fortune 500 companies, it's a whole different ballgame when you scale down to the world of small business. According to a National Federation of Independent Business survey of a random sample of its half-million members, while only 2 percent of respondents in August saw their financial situations as their biggest problem, 10 percent did say they found loans harder to come by—the highest in more than five years. But NFIB chief economist William Dunkelberg notes that that number pales in comparison with previous economic downturns. In the early 1980s, some 30 percent called access to credit their No. 1 headache.

Although credit is tightening, it's not completely clear how the increased turmoil in the credit markets since August has changed that equation when business owners were already saying banks were clamping down. But there's at least some reason for cautious optimism. Even though most banks have essentially stopped lending to each other, it does not mean they are not lending to businesses. Dunkelberg says that small, community banks—he is chairman of one in Cherry Hill, N.J.—are "not particularly affected" by the broader financial problems when it comes to making commercial loans. Notes small-business advocate and radio host Jim Blasingame, "If you're an established small business, you can get the money."

But even if there's no sectorwide credit crunch for small businesses yet, that doesn't mean many firms, especially the bigger ones, aren't being squeezed. George Gendron, director of the Innovation and Entrepreneurship Program at Clark University, says that right now, "there is no growth capital" for high-growth small companies with millions in sales—firms that tend not to deal with small banks. "I have never seen this population more concerned than they are today," Gendron says. Things might be getting worse, too. Rich D'Amaro, CEO of Tatum, LLC, an executive services firm, says that his clients—small and midsize businesses with $50 million to $500 million in annual revenue—are mostly finding growth capital "frozen," with the last 60 days especially bad.