Morningstar vice president of research John Rekenthaler joins Wealth! to explain when the right time is to start tapping into your retirement account.

Rekenthaler lays out the dangers of sequence risk, or the impact of withdrawing retirement funds, explaining, "When you start retirement, if you start pulling out your money from a portfolio and you're withdrawing from your portfolio and you hit a bear market, you can enter into this vicious cycle where you're pulling out money as the portfolio is dropping and you reach a point where the portfolio cannot really recover.

"If you continue pulling out that much money each year and withdrawing from a bear market that hits you early in retirement, your portfolio gets too low, you can't recover."

However, he notes that the reverse can happen within a 401(k) plan when you "have the most money in there, and that's when high returns can really help you. So it's really not sequence risk. It's sequence opportunity, I think, is the way to phrase it. It doesn't matter so much for somebody who's young if they encounter a bear market. There's not much money in their 401(k)... But the last 10 to 15 years, if the markets are strong, if the portfolio performs well, that's a great opportunity for people."

As retirement account holders age, Rekenthaler encourages them to increase their contributions. He notes that over the age of 50, 401(k) owners can deposit up to an extra $7,500 a year. If this is done during a bull market, the returns could be even more significant.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl