All across the nation, Wall Street's wild swings and steep losses have been throwing retirement accounts into disarray. With the Dow Jones losing more than 40 percent since its record high close a year ago and suffering an eight-day loss of 22 percent in early October, investors have racked up more than $8 trillion of losses this year.

It's not a pretty picture for anyone watching their retirement account shrink on a daily basis, but it's important to realize that this chaos has totally different meanings for a 28-year-old and a 62-year-old. Age -- much like income or lifestyle -- plays a huge role in retirement investing. In the current environment, the life stage you're in can mean the difference between boon and bust.

Retirees sent reeling
For those who have already left the workforce and are living off their investments, the current economic problems likely are having a profound affect. Many retirees have taken big hits in their bond funds, and even stocks that generally were considered conservative have been beaten hard in the past year. Depending on their asset allocations, some near retirement may be forced to stick it out in the workplace for a few more years or learn to live on less.

"When you have to withdraw (money) from your portfolio and it is already down, that is kind of a double whammy. You are exacerbating a bad situation," says Christine Fahlund, a senior financial planner at T. Rowe Price.

Fahlund says cutting back significantly is not realistic for a lot of retirees. One option would be to avoid the temptation to increase withdrawals for a couple of years and try to live off the same fixed income without compensating for inflation. Those little changes, she says, can make a big difference in how long the money will last because it keeps more capital working. Even in the current environment, Fahlund says, retirees still need to have some stocks in their portfolio for growth and to protect against inflation.

"For retirees, the mantra there is to cut your withdrawals and hang tight with your long-term investment plans. There's a fear they might run out of money, and the way to avoid that is to focus on the withdrawals," Fahlund says.

The freezing of the credit markets also is affecting retirees. Tom Rogers, principal and certified financial counselor from Portland Financial Planning Group, says that even though retirees may not be in the market for new homes and vehicles, they are indirectly affected by the effects on the bond market and fixed income investments. For examples, as of mid-October, the conservative Vanguard Intermediate Term Tax Exempt Bond Fund yielded a one-year loss of .33 percent and the Vanguard High Yield Tax Exempt Fund showed a one-year loss of 4.10 percent.

"Many people knew there would be volatility with the stock part, but they never anticipated losing money in their bond portfolios," Rogers says.