Depends, dollar cost averaging shifts things around. For a typical 401k style investor having down years mid career improves returns at retirement, but then increases risks in retirement.
The “average” investor gets paid cash and not in stock.
The public tech company employee has less to invest because a large portion of their income is in stock.
The private tech company employee is screwed because statistically, they have equity that won’t amount to shit in a bull market let alone a bear market.
The "average" investor is in jobs less hit by typical recession/down market impacts, since the odds of a hospitality worker or barista having a retirement account in the first place is much lower than the odds of a white collar employee.
The point of comparison would be average reduction in investment vs average reduction in stock price. It’s true people invest less, but stocks take much larger drops than the reduction in the workforce.
And even these days the typical investor probably uses a financial advisor, who would do such fund reallocation, even if they don't use target date funds explicitly (which they should).
Do they really? When I've looked around at financial advisors they've wanted at least several percent annually of AUM, which, to my mind, is just insane.
For this hypothetical, I don't think it makes sense to consider anything but a typical 401k investor that only invests in the sp500. Thats all that we're tracking here.
When spending down money you get the reverse of cost dollar averaging. In a good year you might sell say 1,000 shares but in a down year you might need to sell twice that to take out the same money. This means more of your shares are sold in down years than good years.
This is why people say to increase the bond ratio in retirement, but that also reduces expected returns.