Asian Markets Recover; The Value of Your 401(K)
ROBERTS: Asian markets are stabilizing a bit overnight a day after a frantic stock sell-off. In Japan, the Nikkei index closed down half a percentage point. Hong Kong's Hang Seng had a nice jump back up three percent. Oh, it's another desperate day on Wall Street. The Dow losing another 189 points on Wednesday, a sixth straight day of losses. Dow futures do point to a higher opening this morning, though. And, of course, they did that yesterday, right? Meantime, the Federal Reserve is lending troubled insurance giant, AIG, an additional $37.8 billion. That is on top of the $85 billion that the government lent AIG last month to prevent the company's collapse. Nobody knows where it ends. And the realities of how far this financial crisis could go are very grim. Personal finance expert Suze Orman was on "ANDERSON COOPER 360" last night, and she painted a very somber picture.</s>SUZE ORMAN, PERSONAL FINANCE EXPERT: I want you to think about the reality of this. For those of you out there who all you have is credit card debt, you're losing your home because you're behind on your payments, you can't make your car payment, you work in an industry possibly that you're going to lose a job in, you have absolutely no money and this keeps going on and you can't get another job, what are your going to do? So it is very, very possible out there that you will start to see things not where there are bread lines like we saw, you know, and nobody have anything, but that a lot of people are out on the streets. I have people calling into my show that are actually starting to live in their car because they don't know what else to do.</s>CHETRY: Wow. That picture of the financial meltdown scary to say the least. It's also taking a huge bite out of American's retirement savings. $2 trillion lost in the past 15 months that's left many people looking at their 401(k)s and wondering what to do. Susan McCarthy is a financial adviser and the author of "The Value of Money" and she joins me this morning from Oklahoma City with some advice. Thanks so much for being with us.</s>SUSAN MCCARTHY, AUTHOR, "THE VALUE OF MONEY": Well, thank you. It's a pleasure.</s>CHETRY: You know, when you hear things like that, you get scared and rightfully so. What is your macro take, I guess you could say, on where we are right now?</s>MCCARTHY: Well, you know, in my book, "The Value of Money," I talk about this incredible emotional connection we all have to our money and how it impacts our decisions. So my first piece of advice about where we are right now, is everybody take a deep breath. Take a deep breath. And then look at your personal situation. How many more years do you have to work? How old are you? And really, even how much of your money is exposed, because we're having people call our offices, for example. People are scared to death that everything is going away but, in fact, not all of their money is in the stock market. So, look at your personal situation.</s>CHETRY: Right. All right. So let's take a look. Let's offer some things to think about...</s>MCCARTHY: Sure.</s>CHETRY: ... depending on your age. If you're in your 20s or your 30s, a retirement is far away on the horizon, what do you suggest?</s>MCCARTHY: Well, if you're in your 20s and your 30s, you're in a great situation because you have years to work. So, first of all, don't stop making contributions to that 401(k). Keep contributing to it. When the market goes down, that's beneficial to you because you get more for your money. So keep contributing, stay the course, and just keep the long view.</s>CHETRY: All right. If you're in your 40s or 50s, maybe looking to get a little bit more conservative, what should you be thinking about then?</s>MCCARTHY: Yes. You know, you maybe want to be a little bit more conservative then. That's when you want to get really serious about your asset allocation, how much is in stock, how much is in bond. There's no substitute for working with a good adviser here who can help you project forward, how much you're going to need, when are you going to need it, what you need your money to do. But that's when you really want to get serious, especially in your 50s, about securing some of the money that's in that retirement plan so that you can have access to it when you retire.</s>CHETRY: What do you do for people who say, you know, I don't know if I have the money to go find a financial adviser. Are there any low cost alternatives to that?</s>MCCARTHY: Well, there certainly are. I mean, you can ask around. There are certainly some people who will help you. And there are also some wonderful books out there. "The Value of Money," of course, is one of them. But there are some great books out there to help you. Just simple primers. And another thing that people can do is work with whoever provides the 401(k) for your employer. They generally will provide some instructions, some assistance or some people that you can talk to and that's for free.</s>CHETRY: Well, that's a good idea. And lastly, advice for retirees. These are the people that are probably the most nervous right now -- people that are starting to, or really close to having to draw on this income and seeing their nest egg shrink.</s>MCCARTHY: Right. That is very scary and hopefully those people don't have all of their money in the stock market. Sometimes it's driven by how much income they need. If you can have a portion of your money that's producing income and isn't in the stock market, then you can go ahead and have some money in the market and not worry about it too much. Once again, I think you just really need to stay on top of it and work with a good adviser who can help you.</s>CHETRY: Susan McCarthy, "The Value of Money," thanks for being with us this morning.</s>MCCARTHY: Well, thank you.</s>ROBERTS: It's 30 minutes past the hour now. And here are this morning's top stories. Firefighters battled a massive blaze near Oceanside, California. The wildfire was on Camp Pendleton Marine base in northern San Diego counties. Special helicopters were flown in to help put out the mile wide flames. Authorities in Nevada have raided the state headquarters of a non-profit that registered voters focusing on low-income citizens. The group Acorn is accused of falsifying forms with bogus names and addresses including the names of celebrities. An investigation is still ongoing. And John McCain says his new plan will help homeowners struggling to make mortgage payments. McCain first mentioned the mortgage plan at Tuesday's debate in Nashville and he took it on the road to voters yesterday.</s>SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: The United States government will purchase mortgages directly and immediately from homeowners and mortgage services and replace them, replace them with manageable mortgages that would give rates that people can afford.</s>ROBERTS: Barack Obama is rejecting McCain's mortgage plan calling it costly and out of touch and he told ABC's Charlie Gibson it's vital that the next president restore trust in our financial institutions.</s>SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: We now have irrational despair. That's again why it's so important for the president to be able to restore a sense of confidence and to help change the mindset of traders, the markets.</s>ROBERTS: The latest CNN poll of polls nationally shows the race tightening up just a little bit. Barack Obama is leading John McCain 48 to 44 percent among likely voters, eight percent say they are still undecided. McCain was behind by six points earlier this week. Throughout this campaign the argument of experience has been tossed around a lot at both Barack Obama and Sarah Palin. But at the end of the day do voters really care all that much? Our special correspondent Frank Sesno joins us now live from Washington with that. Good morning, Frank.</s>FRANK SESNO, CNN SPECIAL CORRESPONDENT: Good morning, John. The question is do voters care about that is really a big question because they both so often from the gut. And right now the gut is filled with fear because of what's going on out there. Conservative columnists David Brooks recently took a real shot at the Republican party. He said not only do people deserve the candidates not embrace experience they don't embrace ideas. So the question is ideas, experience, how much do they count?</s>SESNO: Campaign 2008 brought to you by market meltdown, bankruptcy, government bailouts, war and warming. If ever there were a time when experience matters this it is. Which is why we hear -</s>MCCAIN: We don't have time for on the job training, my friends.</s>SESNO: He aimed that one at Obama but careful it could also apply to Palin. Experience is a funny thing. We want our brain surgeons to have it. Might prefer it if she went to Harvard. We want our car mechanics to have it. Our Generals. Event he guys on the roof. If they've done this before we figured maybe the water will stay out. In Europe politicians have tons of experience. They have to rise through party ranks before they can lead. But Jimmy Carter, Bill Clinton, Ronald Reagan, all of them came to Washington as outsiders, almost no national experience.</s>KIRON SKINNER, POLITICAL SCIENTIST: The outsiders critique the system, says things that we like to hear. It also gives us hope to know that someone who is not part of the machine can come to command the electoral center. It says that anything is possible in this country.</s>SESNO: It reflects our history of individualism, our distrust of government. So how do we weigh political experience now?</s>SKINNER: Years on the job does not necessarily translate into good judgment. And judgment is what really the presidential election is about.</s>SESNO: Barack Obama plays the judgment card every chance he gets. John McCain is trying to trumpet with his unique brand of experience. Both are running as outsiders. Part of a long tradition. But with anxiety in the streets there will be a short future for anyone who doesn't credibly address the trouble we're in.</s>SESNO: John, I don't think we've seen a bar this high for presidential candidates maybe in our lifetime. Certainly not in my lifetime. With as much anxiety as I mentioned a moment ago as we got out there judgment and experience never mind the change but judgment and experience are going to be measured as dramatically and harshly as we've ever seen.</s>ROBERTS: Right. But even if people looking at the pool of ideas, are there the ideas out there that make voters comfortable?</s>SESNO: No.</s>ROBERTS: Because on both sides people are saying hey we're not hearing what we need to hear.</s>SESNO: Right. Because what would you say? I mean, you know, the markets are melting down and the Treasury throws $700 billion at it. They continue to meltdown. Banks around the world lower their interest rates. They continue to meltdown. And as I've said with you, John, and every place I can a thousand times, this is so personal, people actually get it because they see their lives changing. So the candidates aren't saying things partially because there is no simple answer. There is no single sound bite that's going to do it and partially I think we're in unchartered territory here.</s>ROBERTS: Yes. I read a story this morning that said that the most effective direct mail advertising has nothing to do with the campaigns it's your monthly 401(k) statement.</s>SESNO: I mean, imagine this, John. Very quickly. Imagine this, imagine if the candidates said what the real case was? You know what folks, we actually don't know what's going to happen here. It's probably going to get a lot worse before it gets better. And you know what? We're just going to do the best we can. That's not very reassuring.</s>ROBERTS: Yes. It's not. But at least it could be real. Frank Sesno with that terrific piece. Great perspective. Frank, thanks so much.</s>SESNO: Thanks, John.</s>CHETRY: Speaking of money woes. Our Gerri Willis is logged on and she's taking questions about your money right now.</s>GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, we're talking 401(k)s. First time home buyers is now your time. There's still time to get your questions in. Log on to CNN.com/am. The answers are coming after the break.