Where do you think those longer term income funds get their money (hint: stocks and investments riskier than stocks, sometimes less liquid too)? If the stock market collapses for long periods of time, those converted pension companies could easily go bankrupt and then you have nothing. Even after 08-09, the market rebounded quickly. If the market crashes 30-40%, just limit your spending/withdraws and it will rebound. They are also great opportunities to add more.
Everyone has their own threshold for pain. I did not mean to imply that I could/should suggest define that for you.
If you have the time to recover, then crashes are a buying opportunity. After getting whacked twice in the last 20 years, I am headed towards the finish line.
Based on the timing for us X’ers...we’ll probably get a huge depression six months before we retire!