Last month, on our Living Below Your Means discussion board, MaryGoodnight cited a post by fellow Fool Community member WendyBG and then asked a question of other board denizens: "How will you play the hand you're dealt?"

Here's some of what WendyBG said that inspired MaryGoodnight's question:

The first time I saw a layoff was in 1981, during that severe recession. I noticed that experienced, older workers, who had worked for the companies for years, were mercilessly cut.

In 1990, during the Bush I administration, there was a recession. The magazine, US News & World Report, published an article on white collar unemployment. They coined the term "DUMPIES" (Destitute Unprepared Middle-Aged Professionals). The DUMPIES were educated corporate workers who had taken on obligations in the expectation of having a permanent job. They had mortgages, kids in school, car payments. They often lived paycheck to paycheck, with slim or no [emergency] funds.

At that time, I was 37, and DH [board shorthand for "dear husband"] was 38. We both had good, secure jobs. However, realizing that we could, realistically, become DUMPIES struck a chill to my heart.

As a result, I decided that I would pay off our 1957 split-level home, instead of buying a larger, nicer home. DH drove his 1984 Volvo, until 2002. I drove subcompacts, which I paid for with cash. DH and I [lived below our means] and saved a significant portion of our incomes (I saved 25% of my take-home pay, in addition to maxing out my IRA and 401k).

DH lost his job at age 47. He has not worked since. I lost my last job at age 48. Since we had saved diligently, together and separately, for 25 years, we were able to gracefully segue into retirement.

It's realistic to prepare for a misfortune that is so likely to happen. By the time you realize that you are in danger, it's too late to save enough to protect yourself.

MaryGoodnight's question
MaryGoodnight launched this thoughtful discussion thread by quoting ziggy29, who said: "Somewhat paradoxically, I think today's younger workers (which for this purpose I'll roughly define as someone under 40) both (a) have more wealth and (b) have less long-term economic security than their parents did at their age."

To this, DSwing responded: "This statement is so much bunk. Today, 401(k) plans are the norm, as are IRAs, and low-cost access to stock investment vehicles. Today's investment opportunities and economy overall are much greater than what my parents had." I can't argue with this, but it's also true that while these opportunities exist, far too many people are simply not taking advantage of them. MaryGoodinght made some additional important points in response: "These vehicles exist in lieu of pensions and paid health care in retirement. In theory, that's all fine and well, but you now bear the burden and risk of guessing and estimating how much you'll need to accumulate to cover the unknown."

She then added: "I think it's been a clever device: you get more people going to college, this translates into more people with higher incomes, you introduce them to a higher standard of living and then get to sell them bigger houses, fancier vacations, more expensive vehicles, etc. Then, after years of being accustomed to this lifestyle, as they begin to age and can't keep up as well, you slowly pull the rug out. I'm thinking many average Joes walking around don't see the bigger picture we see here, so this is our wake-up call to plan ahead. ... What's your plan? How will you play these circumstances?"

My answer
I'd like to offer my answer here, in several parts. Here's what you can do to prepare for unwelcome developments in your financial life:

  • Have an emergency fund full of short-term savings. Our Savings Center is full of tips to help you save enough and save effectively.

  • Regularly sock away long-term savings in the stock market. Open brokerage accounts for your IRA and regular portfolio. (Our Broker Center offers a handy comparison chart of some brokerages, featuring commissions as low as $4 per trade.) You don't need obscure hot stock tips to make you rich. Shares of big, well-known firms can serve you well. Procter & Gamble (NYSE:PG) shares, for example, have rocketed ahead by more than 2,000% in the past 20 years. ExxonMobil (NYSE:XOM) shares have advanced nearly as much.

  • If you don't want to spend the considerable time required to choose and monitor outstanding stocks on an ongoing basis, consider mutual funds, chief among them index funds. We're also eager to point you to some very impressive funds that stand a good chance of outperforming index funds -- grab a free trial of our Champion Funds newsletter and you'll see many funds we've recommended.

  • Live below your means. Our nation's terrible credit card debt problem is, to a large degree, due to people buying things they can't afford. Don't do this. Buy less than you can afford, and put aside the rest. Invest it and you'll still be able to spend it later, when you'll need it more.

WendyBG's story shows the considerable upside that can result from looking at life's big picture and preparing for a rainy day. She and her husband prepared, and were thus able to essentially retire early. When life gave them lemons, they made lemon chiffon pie.

Don't think that a similarly happy ending (or midpoint, really) is out of reach for you. The following articles by Robert Brokamp can help you think more clearly about your retirement plan. You might also want to check out his Rule Your Retirement newsletter, which you can do for free.

Fools respond
Of course long before I got around to offering my thoughts, many fellow Fools in our community had done so. Here's a smattering of their responses:

PanemetCircenses said he deals with today's circumstances "by not buying bigger houses, fancier vacations, more expensive vehicles, etc. And by acquiring financial independence as soon as practicable. You don't always have to play the games by the commonly accepted rules. I have been hyper-aware of the decreased financial security afforded my generation for a long time. This awareness has played a huge part in my financial decisions throughout my life so far." He added later, "... you can think of my choices as basically trying to trade current consumption for economic security. "

CatBarber noted: "My house is small. All the houses in our family are small. You only need so much house ... or car ... which you do not have to buy new. And I cannot remember the last vacation I had that cost a lot of money. I don't know if that puts us in the minority. But even if we are, that's okay. Happiness does not come from stuff."

Ziggy29 agreed: "The sooner people realize that, the sooner they'll realize financial independence regardless of their means. Stuff is expensive. If you can derive enough enjoyment and benefit from a particular piece of stuff, then buy it. But many people buy stuff just to buy stuff, because they fall for marketing hype. ... Large houses are expensive. They cost more to heat and cool. All else being equal, they're costlier to insure and have higher property taxes. And most of all, you have to buy more stuff to fit into a larger home."

indyfan3312 said: "I'll work till the day I die... and that's if I'm lucky to be healthy enough to do it."

MaestroCindi opined: "I honestly think retiring to foreign, lower-cost-of-living countries will become more popular."

IndecisiveFool had an interesting spin: "My wife is an only child so I'm hoping to inherit a boatload of money."

When the conversation turned to Social Security and pensions -- and how to account for them in one's financial plan -- cattleman22 said: "I would not include any of those in planning for retirement. If they are around when I retire in 30 or 40 years, I doubt they will be available for people who chose to be responsible for themselves." (Learn more in Robert Brokamp's "7 Social Security Myths".)

In sum
So there you have it -- some ways to deal with the unpleasant truth that these days, we generally can't count on jobs lasting or Social Security supporting us sufficiently or having a reliable pension. How are you dealing with this hand? Chime in with your thoughts, or just pop in to see what others are saying.

Selena Maranjian 's favorite discussion boards include Book Club , The Eclectic Library, and Card & Board Games. She owns shares of no company mentioned in this article. For more about Selena, view her bio and her profile. You might also be interested in these books she has written or co-written: The Motley Fool Money Guide and The Motley Fool Investment Guide for Teens . The Motley Fool is Fools writing for Fools.