Is anyone else REALLY scared?

I have an IRA and I'm a bit worried. I also have some funds for my kid's college squirreled away and I'm terrified he may have to live at home until he finishes his master's degree.

Thankfully, retirement is about 30 years away for me (who would have ever thought I'd be writing a sentence like that?!), but unfortunately, in three short years, my son will be a freshman in someone's institution of higher learning. Thought I'd have at least that first year covered via the nice little 529 college savings program I've been dumping money in since my divorce 10 years ago ('cause Lord knows his lame-o dad isn't even thinking about how to pay for his first-born's education) - but now things aren't looking so good. Thanks, Wall Street.

The beauty about state college saving's programs is that the money can be withdrawn tax-free if used for education. That's the bad news, too. In other words, if I do what I REALLY want to do and take out every penny and put it in a nice, safe CD, I'd owe Uncle Sam tax on the interest earned. If I leave it in and Wall Street keeps doing the crazy dance it's done since September, there may not be anything left not to tax when Junior's (his name is actually Malcolm) tuition bill is due.

In theory, there is plenty of time for my IRA to rebound before I wave farewell to the world of work, but I barely even have 33 months for the college funds to earn back what was lost and grow. Do I dare continue to contribute at all? Should I take the remainder of what I was to contribute for 2008 and open that CD? CUNY is looking awfully good right now - and he doesn't even know what he wants to major in yet...

My 87-year-old grandmother lived through the depression and never had a bank account until about a year ago. She literally cashed her paychecks and paid all her bills in person or mailed in a USPS money order. I used to think that was crazy, but now I'm thinking it may not be such a bad idea after all...