What's the likelihood that my retirement investments will recuperate in my lifetime?

The basic rule of investing is: buy low, sell high. The means you want to buy when the market goes down, and sell when it goes up. Selling after a drop in prices is exactly the wrong thing to do.

That being said, you need to balance your personal situation. If you have very high interest debts-- it might be worthwhile to sell some of your investments to avoid the interest.... but given that you will need to add on the IRS penalty (which I think is 10%), this seems very unlikely.

Without knowing your personal situation, I would be in very bad shape before I cashed out retirement savings... particularly now.

Many of us are putting more money into the market right now, seeing as the prices are so low.

given how far we have fallen cashing out of equities now is a dicey proposition. It make well take decades to get back to DOW 12,000, the markets did not recover to 1929 levels until the mid 1950's. But you are concerned about the market improving from DOW 7,000, and that could easily happen in a decade or less.

The question is: can you manage your debt load? If not then you should take the huge losses so that you can get fluid enough to ride out the recession/depression. That is the only good reason that I can think of to take the loss.

It depends on when you invested and how old you are.

You buy now and you do not plan on retiring for 30 years from on and you can make some great returns.

If you invested last year and you plan on retiring in 2 years you are screwed.

The overall jist from economists and financial planners is if you do not need the money in 5 years, leave it where it is - however, no one can completely predict the stock market.

If you look historically though, (and I've studied business cycles) you will see that the market has gone up and down over the years, but overall the market has consistently increased over time. I wish I could graph it here for you, because it is more difficult to explain than see. Basicially consider a graph you start at the bottom and then 20 years from now the point is much higher, but in between you see the lines moving up and down with dips and hills.