John is ready to retire. He's in his early 60s, has a good pension from years of being a teacher, has a nest egg of about $400,000 spread into 18 stock funds, and says he is ready for a change.

Sitting in an investment seminar last week, he had just one question: "Is this a bad year to retire?"

John's question was brought out by a slide show on how entering the "distribution phase" of your financial life at the wrong time can ruin your nest egg.

The idea is that if you must withdraw funds from your retirement savings - the money you were counting on to keep making money to pay for your golden years - at a time when the market is in the tank and sucking additional dollars out of your portfolio, you can ruin a life of financial planning right off the bat.

It is a reasonable question in a year of market uncertainty. Watching your mutual funds unravel some of their past gains, it is tough to get comfortable with the idea that you are about to live off the money, rather than simply adding to it. That is when the reality of potential shortfall hits. John also acknowledged that with 18 stock funds, he had too many issues and too little diversification.

With the front edge of the baby boomers now at retirement age and the economy and the stock market seemingly in the tank and likely to struggle for a while longer, investors can suddenly envision the worst-case scenarios that financial advisers routinely talk about.

The common example shown by financial advisers dates back to the 1970s, when the stock market fell 50 percent from January 1973 to January 1975. For someone who planned on retiring in 1975, that drop in prices would have required a drastic change in life plans if the nest egg was the entire planned source of retirement income.

And that was the 1970s, long before workers were as reliant on their own savings as they are today, thanks to the erosion of the pension system.

"If you need to use some of the same money that you need to grow to pay for the rest of your life, you've got a problem," said Paul Arnold, managing director of the Unified Cos., a financial services group based in Cincinnati. "You're going to need to change your plans or your investment strategy, or one bad year really could ruin a lifetime of planning."

For fund investors such as John, the keys are several-fold. Because the accumulation phase is so different from the distribution phase (where you spend your assets), many financial advisers suggest dividing assets accordingly.

For John, the lack of bonds or money market funds is a problem, because all of his money is exposed to the market, which is precisely how timing risk heightens shortfall risk.

The specific funds are less important than the asset allocation.

"When you are putting together your retirement plan, you don't say, 'I am going to retire at age 62, unless of course the three years after I retire will be a bear market,' " said Judy Shine of Shine Investment Advisory Services, of Lone Tree, Colo.

"You need to set aside at least three years' worth of money - I prefer six years - and invest that in things that barely wiggle, and then take the rest of your savings and put it into the kinds of things that sometimes throw up. . . . The steady money protects you against a downturn, and the more volatile money will have enough time to recover and grow, letting you replenish what you are spending in time," Shine said.

Truth be told, John was hoping for an answer that was more about the market, and about its prospects for the rest of the year and into 2009.

Shine and others would answer John's retirement question a bit differently than he might expect. While he was hoping for some market commentary, or possibly an evaluation of the funds in his portfolio, the real answer comes from a combination of other factors. His pension is a big help, but his needs and desires - which will determine if he spends beyond that pension income - are equally crucial.

Shine says, "People assume that if they pick the right funds and stick with them forever, they'll be set to retire . . . and they might be, but that's more by luck or accident than by design. They go out looking for some fund that meets a perceived need, and it's not always right. It's not 'Will I get hurt if I retire this year,' but 'What number satisfies my needs for spending, and yet allows me to keep my hands off my portfolio in case we're in for another bad year or two.'"