I’ve mentioned in several previous posts that the anxiety about 401(k) balances has been largely overstated, in part because of the beneficial effects of ongoing contributions and diversified portfolios. This point has come across as Pollyanna-ish to some of you, a point that I can sympathize with, even though I largely disagree with it.

However, I am no Pollyanna about retirement risks, and want to spend a moment discussing what I view as the most important real risk embedded in your retirement savings account: the possible toxic combination of unemployment and market losses.

I have six family members or friends who have lost their jobs in the current recession. (By the way, I started the prior sentence by writing “three” people with lost jobs. But then I kept editing it—first three, then four, and then on to five and finally six, where I’ve decided to stop for the moment.)

Anyway, in this group, all have made draconian cuts in their standard of living. And in the current environment, where jobs are scarce, they are spending down retirement savings to pay for necessities. Housing, food, transportation expenses. And, for at least three people, the costs of continuing health insurance. (For three others, health benefits are lapsing or never were available—a different but related topic.)

Being unemployed, encountering a market decline, and spending down from retirement accounts is a worst-case outcome for your retirement plan. Not only are asset values declining, your spending from the account accelerates the decline, there’s no chance of restoring values through ongoing contributions, and on top of it all, you’ll owe a 10% penalty tax (plus any regular income taxes) if you’re under age 59½. Depending on how long your unemployment endures, a lifetime of savings can be quickly depleted.

In the United States, 401(k) savings have become an informal social insurance system (at least for those households with 401(k)s). They provide a financial backstop and in some sense allow for relatively low unemployment benefits. The solution to this dilemma is, of course, expensive—higher unemployment benefits, plus restrictions on your ability to tap retirement savings. The former seems not on the horizon, as Congress struggled with the latest extension of unemployment benefits. And as for the latter, it would be positively Scrooge-like to disallow withdrawals to the unemployed at this point.

So by no means am I Pollyanna-ish about 401(k) risks. It’s worth recalling that for those of us still working, and saving, our perceived risks pale in comparison to the unemployed forced to spend down their savings. Call it the “pink slip” risk—the pink layoff slip that stands between your carefully crafted retirements plan and crisis.