Ok, so it was a compounding of issues all hitting at once. Panic, poor emergency fund to cover loss of job, signing a variable interest loan and totally ignoring the looming payment increase and not making preparations whatsoever.
As I said, I'm not saying "these fucking morons, they lost their own shit like idiots". It's more complex than that. Most people have some difficulty budgeting and there's always something you could be doing better. I'm just saying, in the context of "people's retirement evaporated overnight", that is largely the result of those people poorly managing their funds and portfolios. Ultimately the blame for a lot of these ridiculous mortgages lies on the banks and approval agencies, but that was one factor in a sea of factors that led to a lot of these people being homeless. People living beyond their means.
Don't take my statements to be judgemental on those people, it's a simple statement of fact. I consider these facts every time I am thinking about a major purchase -- when is the next time some major market event could put me in a pinch? Will this put me beyond my means so that if/when it happens I will have to start losing major pieces of my life?
And regarding "you're about to retire/already retired", which really was the primary scenario that I was responding to in the first place, you don't retire and then withdraw everything. You don't cut over from 80/20 to 10/90 at age 65. This is a slow gradual process, and withdrawing your retirement takes decades. The only way you could realize 30% overnight losses is if you just rode 80/20 straight into retirement, which again is a terrible financial plan. Anybody anywhere close to retirement should be well away from the volatility of the market already. You're supposed to change your allocation every year. Those people who had a proper allocation for their age, with a portfolio that was even semi-diversified, would not have seen any major overnight losses to their portfolio, given that it would be primarily bond-driven.