Not the one in Galveston; I’m not sure what lesson that teaches other than the need to live somewhere else. I’m referring to the one on Wall Street, which, it’s fair to say, hasn’t ended yet. In many similar situations, employees of the distressed or bankrupt companies had much of their wealth in stock of their employer, either owned outright or through retirement accounts. We have read reports that managements at these companies were urging their employees not to sell their stock, that the company would recover, a classic case of a conflict of interest where retirement accounts were involved. The employees at those companies have suffered and will continue to suffer, perhaps without a solution. Are there lessons for others in this disaster?

As to retirement accounts, these problems suggest a theme often discussed in these blogs: the need to pay attention to retirement accounts and to manage them or obtain skilled management for them. It seems very unlikely that there will be a bailout for the rest of us, so it’s our obligation to find out what to do and do it. This task fall into several categories. I suppose the most difficult is to develop the discipline to save more. Sometimes that means living on less in the present, and that’s always difficult. Perhaps putting a picture of those Lehman employees cleaning out their offices on the refrigerator would help.

Once that decision is made, how are the funds to be invested? My opinion is that nearly everyone lacks the skill to invest for retirement. There are at least two solutions: one is to have a professional adviser. The key is to have a skilled one and to develop a level of trust in that adviser, but never to stop asking questions or trying to understand what’s happening. The second option is to use a target retirement method, by which you choose an approximate retirement date and have an automatic allocation among mutual funds. This allocation changes over time, reducing the riskiness of investments as you get older. Again, the retirement account owner should continue to watch what’s happening and ask questions.

Another element that needs planning is the distribution of retirement assets. In addition to the statutory requirements for minimum distributions, there are questions as to which accounts should be spent first, taxable or tax-deferred, and also which tax-deferred accounts should be spent. Again, it’s important to have advice on this process, because the wrong choice can result in an unnecessary waste of savings.