Even before the housing bubble, the country was facing a retirement crisis, with most Americans saving too little, if anything. The housing bubble — and subsequent bust — have made that bad situation worse. As house prices surged through the middle of this decade, the already low savings rate turned negative. Many Americans were living beyond their means, in part, because swelling home values created an illusion of wealth. Now, with house prices falling, nearly 10 million people have lost all of their home equity.

Millions of Americans will not be able to recover their equity or build their savings in time to have a secure retirement. Congress must do a lot more to help Americans have more secure retirements. Modest tax increases and modest benefit cuts, phased in over decades, could put Social Security on a firm financial footing, if only Congress would act.

A modernised system of unemployment compensation and universal health care coverage would allay the potentially devastating financial setbacks. Both would help to ensure that money that is put in a retirement account stays there. Even if all these issues were addressed right away, some people would still come up short — unable to rebound from years of undersaving. Timely repair work could go a long way to averting a wider disaster.