The good news: After crunching numbers and having some long talks about lifestyle and income requirements, my wife and I have decided it's possible and desirable to move up ER by two years. We're aiming for a departure of just about 2 years from now.
Long-term, our two COLA'ed pensions will provide 85%+ of our desired income, and if necessary, we could get by on them alone without making huge sacrifices. However under our new plan, they won't kick in until 5 years after we leave. In order to pull this off, we'll need to heavily tap our pre-tax plans - we each have a 401k, 457 and 401a. The plan is to survive these 5 years by draining both 457's (no early withdrawal penalty), and rollover all of the other plans to IRA's so we can take the max 72t withdrawal.
The problem - our current allocation and contributions were set up with a longer term plan in mind, with much less reliance on the pre-tax money near term. As such, I made the decision to be pretty aggressive with it...and needless to say, it's been taking a beating. I need to do something to reduce the volatility, but am unsure how and when to best to approach this.
One thought I had, is to make few if any changes to the existing allocation immediately, but change 100% of our future 457 contributions to the lowest risk, lowest return options available to us. We could contribute enough over the next 2 years to this "bucket", to last us through the end of 2011. The thought/hope being, that the existing funds might start making some recovery over the next 3 years, during which time I can gradually change the allocations without taking too much of a bath.
I realize the above may border on the dreaded "market timing" I've tried to avoid, but short of working longer and sticking to our original plan, the only other option I see is taking our lumps right now.
Any words of wisdom? I'm pretty tough...feel free to include ridicule for my past actions as well, in the interest of educating others.