While not all the news is bad, there is no question that the circumstances surrounding the U.S. stock and bond markets are grounds enough for justified fear. The good news is that with proper planning, your retirement readiness or success should not be contingent on a single market move or a particular year's performance.
Rote though it may sound, a well-conceived portfolio, widely diversified across domestic and international equity and bond positions, should still survive a year or three of downside surprises.
Here are three keys ways to survive such a scenario:
1. Don't bet on the market's direction based on macro headlines. Even from the brightest minds, forecasts have proved futile. One retiree, frantic, contacted me because his nest egg suffered a 28 percent loss—this year. How? His advisor bet on the scary headlines last December that 2013 would be a bust and tried to become a hero by shorting the market.
2. Be willing to be boring. "It's not the return on my money that I'm interested in, it's the return of my money," said famous investor Mark Twain. And while I don't recommend investing in mason jars to hide your nest egg underground, I agree with Twain—in spirit—that your primary objective in retirement should be capital preservation over growth.
3. Be flexible. While I do believe that a 4 percent withdrawal rate can be responsibly used as a litmus test for your retirement readiness, I don't believe that establishing an unyielding withdrawal rate or amount is the path of wisdom. Wait until a year like this past year to take the grandkids to Disney, and be willing to suspend your season tickets to the symphony in a down year. Allow the expansion and contraction of your annual spending to mirror your portfolio.