I am trying to locate a word.  It is a German word (that is used in
English) that means literally; 'wisdom of the stairs'.  The idea being
that the perfect retort only occurs to a person when they are going
down the stairs or already out of the building.  It has been years
since I heard this word used and I can't for the life of me remember
it.

Dear bogieworks,

The German word you are looking for is "Treppenwitz".

I know it for sure since German is my native language. I do,
unfortunately, not have a German etymology dictionary handy, but there
is no doubt it is the right term. In case you need a source, I have
found this for you:

"Treppenwitz: Striking reply that crosses one's mind belated when
already leaving, on the stairs. People are often angry because they
did not have the fitting answer directly during a conversation. The
term is old, but it was made popular by W. Lewis Hertslet who
published in 1882 his book 'Treppenwitz der Weltgeschichte'. In that
book, he writes: 'Like to a petitioner who is just leaving after an
audience, a piquant, striking words occurs to history almost always
delayed.'"

Source:

Munich University: Sabine Engelke - Idioms - Neues vom Treppenwitz (in
German)
http://www.cis.uni-muenchen.de/people/Engelke/trepp.html

"Esprit de l'escalier / Treppenwitz [French/German]: {W} Thinking of a
clever remark (especially the perfect rejoinder to someone's comment)
only after it is far too late to actually say it. The German
Treppenwitz also is applied to events that seem to be the result of a
cosmic joke, such as the Battle of New Orleans in the War of 1812,
where the United States won the biggest victory of the war two weeks
after a peace treaty had been signed."

Source:

Beemer's Home Page: Some Good Words, by Seth McGinnis
http://richter.colorado.edu/~sethmc/words.html
 
Search terms used:
treppenwitz weggehen
://www.google.de/search?hl=de&ie=UTF-8&oe=UTF-8&newwindow=1&q=treppenwitz+weggehen&meta=
treppenwitz esprit escalier
://www.google.de/search?hl=de&ie=UTF-8&oe=UTF-8&newwindow=1&q=treppenwitz+esprit+escalier&meta=

Hope this answers your question!
Best regards,
Scriptor

in French, i believe the expression is "l'esprit d'escalier" which
i've always thought had a very nice ring to it.  english translation
would be something like 'staircase wit'.