James Tzitzouris, an investment analyst with T. Rowe Price has a timely, if rather frightening, article on how to handle the first five years of retirement should one begin in a bear market, like, say, the one we're currently in.
So much for the idea that I can pick a percentage, add to it year by year for inflation, and never again have to check the stock market while I retire in financial bliss, assured that my money will outlive me. Apparently I will never get away from having to pay attention to the financial markets and acting accordingly.
To his credit, Tzitzouris has a number of ideas as to how to approach retirement during a downward spiral, and it is clear that it is most devastating when it occurs at the beginning of one's retirement. Fortunately, this is precisely the time when one is better able to postpone the retirement date, continue to work part-time, or take other steps such as not increasing the percentage taken out each year, to lessen the impact of the bear market.
Since my own retirement is still ten years away, I don't yet have to face retiring in a bear market, but that's the thing about a cyclic market--when I do choose to retire, who knows where in the cycle it will be.
My thanks to Emily Brandon and her excellent blog Planning to Retire for pointing out Tzitzouris' timely article.