Work/retirement crossroads sign.
Work/retirement crossroads sign. - 
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Tess Vigeland: This past year may have been good to bankers, but you cannot say the same for folks who were hoping to retire. Some did so earlier than they had expected to because of job cuts. Others saw their retirement funds disappear in the stock market implosion. But maybe, just maybe, this is when you should think about getting out of the rat race. Jonathan Clements is a former personal finance columnist for the Wall Street Journal and wrote recently that recessions can be a great time to retire. Welcome to the program.

JONATHAN CLEMENTS: It's great to be with you, Tess.

Vigeland: Now in reading your article I found it very counterintuitive because I think most folks looking at, for example, March 2009, when the Dow hit bottom at, what, 6500, that that would be the worst possible time to retire, but you say otherwise.

CLEMENTS: When you're thinking about retirement it isn't the total value of your portfolio that is really important, instead what's important is the amount of income that your portfolio can generate. Go back to March 2009, when we're looking at a market that had fallen almost 60 percent and everybody is totally panicked. Yes, it would have been an enormously uncomfortable time to call it quits. And yet if you're thinking about the income that your portfolio can generate, it would actually have been an excellent time to leave the workforce. If you're retiring in the middle of a bull market, you probably want to look at your stock portfolio, and say, all right, maybe it isn't really worth quite what I'm looking at today, maybe the next major move by the market is going to be doubt, and therefore, I should just take my stock portfolio, lop off 30 percent and say, would I still be comfortable calling it quits? If you are, hand in your notice. If not, maybe you should stay in the workforce a little bit longer, and save a little bit more, and see what happens to the market from here.

Vigeland: So does that mean that we shouldn't go to those online calculators and figure out that magic number where we can retire?

CLEMENTS: What you should do is start by thinking about how much income you need to feel comfortable in retirement. What do you need to cover the utility bills, to cover the grocery bills, to travel a little bit, to go out to dinner once in a while. Once you've got that number than think about how much income you're going to have coming in. You'll have income coming in from Social Security, you might have a pension, maybe you have some annuity coming in, and then of course, you'll have the dividends and interest that your portfolio generates. If you can't cover that basic level of income from all those different sources, maybe you don't have enough to retire.

Vigeland: And yet I suppose that we must caution that retiring in a bear market when stocks are down certainly doesn't guarantee that you're going to get great results, as time marches on, right?

CLEMENTS: Absolutely not. If you retire when stock prices are down 30 percent, maybe they'll fall another 30 percent. There is always that risk. Still, given a choice wouldn't you rather retire with a million dollars in March 2009 when stock prices have been falling 50/70 percent than to retire with a million dollars in October 2007 when the market is at an all-time high?

Vigeland: If we go with the assumption that retiring is better in a bear market, that certainly doesn't mean that you're wanting to sell your stocks at that point.

CLEMENTS: Absolutely, Tess. The bear market offers the reality check, but no, it ain't a great time to be selling.

Vigeland: All right, counter-intuitive as I said, but very interesting to contemplate. Jonathan Clements, thanks so much for your time.

CLEMENTS: It's a pleasure to be with you again, Tess.

Follow Tess Vigeland at @tessvigeland