Retiring During a Market Downturn? Here's Your Playbook.

Following the stock market has been an extremely stressful thing this month -- and I'm not even on the cusp of retirement. But if you're someone who is, you may be wondering how on earth you're going to pull off a permanent workforce exit at a time when the market is so volatile.

The reality is that retiring when the market is down isn't easy. But here are some next steps to take if your plan is to end your career very soon.

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1. Look at your asset allocation

Many people's portfolios are down right now due to recent market turbulence. But if you have enough of your retirement savings outside the stock market, your plans may not be jeopardized.

Near-retirees are often advised to shift away from stocks and move into bonds before their careers end. If you made that move last year or earlier this year, it may be that your portfolio isn't down so much on a whole. And that could mean that you don't need to change your retirement plans.

2. See how much cash you've stockpiled

It's generally a good idea to have one to two years' worth of living expenses in cash ahead of retirement. That way, if the market experiences a prolonged slump, you'll have a means of paying your bills without having to tap your portfolio at the wrong time.

Take a look at your cash savings to see how many months of bills you can cover. If you've got at least a year's worth of expenses in cash, sticking to your plans may be doable. If you're short on cash, you may want to stay at your job a bit longer.

3. Figure out what Social Security will pay you

Even if you have a nice amount of savings, Social Security could end up being an important retirement income source for you. If you're worried about tapping your portfolio in the near term but are looking to retire very soon, see what monthly benefit you're entitled to, and figure out how much of your expenses it will cover.

It may be that you can pay 60% or 70% of your anticipated expenses on Social Security because you're in line for a generous benefit, or because you're in your late 60s or close to 70 and you delayed your claim past full retirement age. If so, and you only need your savings to cover a small portion of your expenses, you may feel comfortable retiring knowing you won't be tapping your portfolio all that much in the near term.

4. Decide if you can work a bit longer

With the right asset allocation, cash savings, and Social Security benefits at your disposal, retiring during a market downturn may be more than possible. But if you're still not comfortable with it, think how terrible it will be -- or not -- to work for another year.

It's one thing if your company is on the verge of collapse, or if your job is so stressful that it's harmful to your health. But if your job isn't in danger of going away and you mostly don't mind going to work, you may feel better about the idea of plugging away for another year, boosting your cash reserves even more, and retiring at a time when the market is perhaps in a better place.

Ultimately, it's a tough thing to be wrapping up your career when the stock market is slumping. But if you prepared well, you may be just fine to move forward with your plans without missing a beat.

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