Watching my 401(k) shrivel has been a surprisingly lonely experience.

I know there are millions of others in my leaky boat: Last year alone, the average 401(k) account balance slumped from almost $41,000 to $36,390, according to one research firm. Wilshire Associates, an investment advisory firm based in New York, says stocks have lost about $8 trillion in value since peaking in March 2000 -- an amount equal to the annual economic output of Japan, Germany and Canada combined.

But my broker seems pretty cheerful. Friends joke and shrug about the stock market. Lines at the mall are longer than ever.

It sure is quiet out here in the cold.

So I find comfort in probing fellow wounded about how they're dealing with their losses -- not just financially, but also psychologically.

Take my friend Cynthia Fitzgerald, 41, who began investing her young daughter's college money years ago into a highly diversified set of funds. Smart, right?

"Wrong, wrong, wrong," she groans. "Everything tanked. I kept the funds because they always say long-term investors shouldn't react to every glitch in the market. Now I have to get rid of them because I don't think there's any way they will ever rebound.

"I get anxious, sometimes I lose sleep," Fitzgerald confides. "Usually, I'm busy enough during the day that it's a background irritant and no more. But sometimes I find myself up at 3 a.m., pissed off at myself, pissed off at those stupid Internet techies who thought they didn't need basic business principles because their 'product' was somehow 'special' and pissed off at the politicians who wink at all the slimy practices of accountants and stockbrokers."

While she's angry, I feel a weird sense of shame, tied into old feelings of inadequacy that resurfaced during a recent visit from my father. Living on his retirement savings, Dad gives a modest sum to my daughters on their birthdays, money that I am supposed to invest wisely. When, out of curiosity, he asked to see my most recent mutual fund statement, I gave him the still-sealed envelope, feeling like I was handing over my lackluster fifth-grade report card.

Like Cynthia, I had done what my broker suggested, asking few questions and working on blind faith. As a result, I've lost more than half of my children's college fund. Not to mention that right there, in black and white for Dad to see, was that exceptionally damning line item: WorldCom.

Mourning the Dream

Carl Greiner, a professor of psychiatry at the University of Nebraska, is an expert in grief counseling who has worked with people diagnosed with cancer for 20 years. Today, like many clinical therapists, he finds his appointment book crowded with people muddling through a different type of loss. "The death of a dream," Greiner calls it.

These post-bubble clients are experiencing many elements of the grieving process: Confusion, shock, helplessness, sadness and self-reproach are all there, along with denial, anger, bargaining, unhappiness and final acceptance. These feelings are intermittent, "like a crashing wave," says Greiner, "triggered by certain situations, like seeing others who do not appear to be suffering.

Guilt, coupled with feelings of betrayal, is also part of the mix, Greiner notes. He cites one of his clients, a divorcee who, for years, has saved for her children's college tuition by forgoing vacations and doing without things for herself. "She made a deep personal commitment to this goal, but now she feels cheated. Maybe her investment adviser misled her, putting her in riskier funds than she believed. So many of us have had to face our own sense of personal credibility and adequacy. We're feeling like chumps, in that we might have been too trusting with our financial advisors. We wonder, 'Do I not read people well? Did I not try hard enough?' " But Greiner reminds his clients that many people "have been unfortunate, not necessarily foolish."

How people react to their vaporized savings seems to depend a lot on how the loss happened, and at what stage of the "dream" they are. Many working people I spoke to, particularly those under 45, have accepted their losses stoically. In the opinion of one, "We were too greedy in the '90s, and many people did not adhere to sound market advice. It is a tough lesson for many, but you have to remember your investment strategy: If you are not investing for the long haul, you shouldn't be in the market."

In Greiner's experience, it's hardly that simple for those who have lost not just money but also a vision for the future. The most acute psychological effects are being felt by those who, through no choice of their own, had large sums tied up in their own company's failed stock, and those on the brink of retirement who now understand that they have to defer, or completely scuttle, their plans. "These are the folks who feel the most helpless, like they didn't get a fair chance. It's a very different situation than for those who have the time or resources to view their investments as long-term speculation, and can now take an 'easy come, easy go' attitude."

The wounded include 57-year-old mortgage broker Rhonda Wollheim of Chicago, who is watching her retirement drift farther out of reach with each monthly statement. "My husband and I are very concerned that we won't ever be able to retire," she says. "I've worked hard for many years and dreamed of retirement; now I am terrified I'll have to keep on working well past retirement age just to meet my financial obligations. Putting our children through college, and then paying for their weddings, put a huge strain on us both personally and financially. We've almost become resigned to the notion that our 'golden years' will be spent working and not relaxing."

Retired sales executive Allen Guttenberg, 80, is spending his 'golden years' under more stress than he ever experienced in the workforce. "I retired when I was 55, and now I'm fearful that the money will run out for my wife and me." Guttenberg, also a resident of Chicago, invested prudently in equities for much of his working life, but recent hits to his retirement accounts, along with a threefold increase in his HMO premiums, has left this cautious planner discouraged and anxious.

"I've always been careful to calculate exactly what our financial needs would be, but now I'm worried we won't have enough money to last our lifetimes," he tells me. "It's incredibly frustrating and depressing to see the money you worked to accumulate for years dwindle substantially in just a few years."

Women have been especially hit hard psychologically, says Laurie Young, executive director of OWL (formerly known as the Older Women's League), a Washington-based advocacy organization. She reports high levels of distress among her constituency -- women at midlife and older. "These women are disproportionately affected because of issues affecting women of all ages -- they're more likely than men to be in jobs without pensions, or in caregiving roles that preclude or interrupt their earning and saving capacity. Now they are seeing their modest investments dwindle."

Single female retirees watching their dividends shrink are considering reentering the workforce, she says, but the double whammy of being female and over 50 can make landing a job seem impossible. "The pressure from a mental health perspective can be devastating, generating symptoms from depression to panic disorders," says Young, a psychotherapist and former senior executive of the National Mental Health Association.

Many older men are also struggling with loss-induced stresses, but these are more tied to a loss of identity as the family breadwinner, says Stephen Goldbart., a licensed clinical psychologist and co-founder of the Money, Meaning and Choices Institute in Kentfield, Calif. "Many men commingle self-worth with financial worth, and under diminished circumstances, may now feel disempowered and unproductive, even if the sums involved are relatively small. They believed in the system -- the American dream that you will be rewarded for working hard and playing by the rules. But it didn't happen, and now they feel humiliated in front of others who, in their eyes, still seem to be doing okay."

Golden Idols

The Money, Meaning and Choices Institute won a lot of attention in the '90s for its work counseling Silicon Valley types suffering from what the organization coined "Sudden Wealth Syndrome." Now Goldbart is helping many of the same people cope with their abrupt reversal of fortune.

But just as it was hard to generate sympathy back then for guilt-ridden dot-commers tripping uncomfortably over their newfound wealth, I can't muster much now that their fabulous gains have become shocking losses. But I think their experience does hold resonance for all of us.

"Money has become such a prominent token of Americans' identity," says Joan DiFuria, the institute's other co-founder. "For the past 20 years, the yardstick of financial wealth and consumerism has dominated our country's culture. Yet is it still taboo to talk openly about money, especially about losing it." In this silence, she says, "fantasies and emotions become much bigger."

A heavy-hitting sales manager whom Goldbart is counseling is "a smart, upbeat guy who became very, very depressed" after losing 80 percent of the retirement assets he amassed over 15 years at his company. "His feelings of powerlessness manifested in a shrugging, 'who am I to complain?' attitude. He only began to recover when he allowed himself to acknowledge his anger and frustration." Depression stems from denying loss, he says, "freezing you in place. There are a lot of frozen people out there."

John Hotz is deputy director of the Pension Rights Center, a Washington-based advocacy organization that provides legal backup to pension counseling programs operated by the federal Administration on Aging. "We know there are folks out there whose balances are near zero, but they're just not calling for help, as you'd expect. The business community has done an excellent job convincing them that it's their problem, so they don't know of any realistic advocacy avenue." Aside from dealing with the devastating financial aspect of losing a nest egg, Hotz says, "it must be psychologically traumatizing to feel so alone."

The anxiety infusing the national conversation -- brought about by Sept. 11, 2001, uncertain elections, corporate corruption, sniper terrorists and a steady march to war -- isn't helped by watching our nest eggs shrivel. "Something in our belief system has gone awry," says Goldbart. "And it's not being talked about. The political climate has taken this whole issue off the front page. Instead of people beating themselves up and asking, 'Where did I go wrong?' we need a national dialogue, a conversation about the damage to our collective sense of well-being." Convene town hall discussions about money and the values we attach to it could be healing for many, he believes.

Steps to Acceptance

On a more practical level, Greiner suggests several ways to mitigate lingering negative feelings. "Part of coping is taking home the facts," he says, and that means opening those monthly envelopes. "Review your statements, and realistically calculate your timeline. Consider other financial resources you can draw on -- even if that wasn't part of the plan -- but also confront future financial risks you might face, such as caring for elderly parents some day. Facing reality cold will give you back a sense of control."

Retirees considering a return to the workforce may wish to contact local or state agencies on aging for placement programs and other resources. "Don't feel you have to do any of this alone," says Young. "Fight against the idea that it is somehow your fault and that you have to fix it by yourself."

Do what it takes to achieve some closure, Greiner recommends. If you're dreading having to stay on the job for 10 more years instead of retiring early, "maybe you should take it as a sign to find something you like to do better." Or if watching your losses mount month after month causes too much pain, consider selling your shares. "Locking in a loss may be better for you psychologically if it means putting things to rest and moving forward," he says.

And move forward you must, he adds. Investors have to get back on that horse, so start crafting strategies that suit to your risk profile.

My friend Cynthia, for one, has found her equilibrium once more. "I stopped opening statements in early 2001, but now I'm opening them again, figuring out what I need to change, whether there are tax advantages to making changes before the end of the year, etc." She says her attitudes about money and wealth haven't really suffered. "My husband and I share the same view: Money is nice, but it's not worth working 70-hour weeks or being unethical. Life is about way more than that. We both still believe that, with all our hearts."

Soul-searching like this can help ease feelings of guilt, anxiety and grief, Greiner believes. "Start by asking yourself what was really behind those dreams that now seem dashed. Was your goal to send your children to Cornell for four years, or was it ultimately to send them into the world as well-educated adults? That's still doable." A truly ideal retirement may have less to do with luxury than with having ample creative time and good health. Getting to the heart of your dream may reveal new ways of achieving it, he asserts.

Separating your identity from your income is also key to healing, Greiner adds. "Go back to the basic questions: What am I about? What can I realistically promise to myself and to others? There's no magic bullet, but a reformulation of self can help you find the bedrock that a financial loss can't shake."


Martha Frase-Blunt last wrote for the Health section about workplace incivility, aka "the jerk at work."