Liz Pulliam Weston from MSN Money wrote a good article about retiring when the stock market is tanking
. Here's a few quotes from the article:
"Big drops in the stock market obviously can devastate retirement accounts. But the people most at risk are those who have just retired or who are about to retire.
That's because dipping into a shriveled nest egg can dramatically increase your chances of running out of money. The cash you take out won't be there to earn future returns when the market recovers; what's left would have to earn extraordinary gains to make up for the double-whammy of market losses and your withdrawals.
Get help. Retirement calculations have too many moving parts, and the consequences of mistakes are too serious for you to go it alone. Seek advice from a fee-only financial planner who has plenty of experience with retirees.
Don't bail on the stock market. Typical retirees need to keep at least half of their portfolios in stocks or stock mutual funds to offset inflation's effects. Keeping all of your money in so-called safe investments -- bonds, Treasurys, savings accounts, certificates of deposit or money market accounts -- ensures your purchasing power will decline over time as inflation and taxes erode your nest egg's value.
Consider putting off retirement. The simplest solution may be waiting to retire until the market is firmly back in positive territory. You may still have to deal with future dips, but at least you're not starting out by scooping money from a shrinking pool.
Consider part-time work. Whatever you can do to reduce your initial withdrawals will help stretch your nest egg."