Should I cheer for the bear or bull?
First off, I think it would be deeply against the rules here to give investment advice. Don't take this answer as investment advice.

For the answer to a) and b)

There is no reason why an index must return to the long term average, income or price wise. Whether it does or does not depends on the economic situation as a whole and as such relying only on historical statistics may not be productive. The western economy is going through difficult times right now, where growth and interest rates are low, and there are many structural problems to be concerned about. I would not be so sure that the market is undervalued to begin with (it might have been overvalued before - but possibly less so than some other western exchanges).

In general, you should not decide upon retirement savings based on bets on short term market fluctuation. Especially not, if you are not a professional investor.

As for the general retirement savings advice. Younger people should invest in stocks, since the investment has a long tail. As such the higher standard deviation of the investment is not as relevant as the higher expected return. When getting older, less deviation is preferred, as more certainty regarding the retirement savings is preferred. As such some nations with funded schemes have decided to invest overwhelmingly into stocks for young individuals, and progressively more to bonds for older individuals. This is a sound strategy.