Tony Towers:

I'm retired and living off my IRA/401k withdrawals that supplement Social Security. My financial assets include a few individual stock and fixed income issues that have been hit hard this year, but most of my investments are in mutual funds. From time to time I update an Excel spreadsheet that shows whether I'll run out of money by the age of 100 on an inflation-adjusted basis. At the start of the year I had a projected surplus at the age of 100. Today I recalculated, but this time made the assumption that I would lose 100% of a few issues such as junk bonds and individual stocks that have fallen greatly, etc. I was surprised to see that despite the year to date losses, I wouldn't run out of money until age 98 using a conservative 5% growth rate for the aggregate investments. My yearly withdrawals  should be no more than 4% during this time. I also maintain a 2-year budget that shows cash balances at the end of each month after expenses are deducted from beginning money market and bank balances and social security payments that I’ll receive during this time. I’m going 2 years out because I want to have sufficient after tax funds available to cover costs over this period. I don't go further than 2 years because I always maintain enough diversification to preclude selling at a loss. I think it’s helpful to work with these Excel spreadsheets to get an idea of the future. I find this analysis  helpful because it reduces  stress  from  current market  conditions that may get worse, but will eventually  get better.

what would happen if your investments went down as you describe and the government checks stop coming?