I'm in about the same situation as you. However, remember that you are only taking a loss when you start withdrawing the money.
I plan to work at least 2-3 years longer and I'll be continuing to fund my 401k. I'll be buying shares at a lower price due to the downturn and hopefully I'll ride them back up when we finally come out of this.
Those considering retiring now need to be aware of the "sequence of returns risk." Simply stated, the absolute worst time to withdraw from your retirement funds is when the markets are down, as you are selling more investments to pull a set rate of cash. You will now have less investments (shares) to grow in later years. When your financial planner runs the Monte Carlo simulator and tells you that you have a 90% chance of not outliving your money, the 10% chance that you will is directly tied to this sequence of returns risk in your early retirement years.