I think many who were due to retire around 2001 or 2008 would disagree that it works.

If you're all in on the day of retirement, you should have hired a financial advisor decades before.

Here's how this works for those that haven't even bothered to read anything related to retirement planning.

You slowly move from high risk/volatile investments to those that are lower risk. Something like Bonds might work. You also have your own small hedge with things like precious metals (less than 10% typically).

One can also move their money to assets that typically appreciate but also generate reliable income (real estate for example, but annuities, etc., are options).

Hell, even read the cheat sheet and you'll know more than most people (seemingly): http://www.dummies.com/personal-finance/financial-help/perso...

It still mostly worked fine? In 2001-2002, S&P500 was still higher than it had been for all but 5 of the last 40 years (after adjusting for inflation). So it was far more effective than hoarding cash. 2008-2009 was slightly worse, but the same idea still applies.

The transition away from pension plans leaving people unprepared for retirement was probably a much bigger issue than the state of the stock market at retirement.