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Robert Bauman doesn't think of himself as a market timer. But in late 2012 he ditched bonds, shifting 100% of his retirement money into stocks.

"I felt that bonds had nowhere to go, that they would underperform," says Robert. Thanks to 2013's bull market, things turned out well, but now he's worried that the stock market is ripe for a fall.

His real fear: a long bear market that would sabotage the early retirement that he and his wife, Suzanne, dream of. Robert, a pharmacist, hopes to work full-time for six more years, until he turns 60, then work part-time for another four years or so; Suzanne, a stay-at-home mom to the couple's four children for decades, wants to work at her new part-time job at a spa until Robert retires.

"We'd like to be able to visit family and do some traveling," says Suzanne, anticipating that the kids won't be living nearby. "I'd like to go back to Europe."

Three of their children are still in college, but the Baumans have already covered most of their education. They expect to help their kids out a few more years with about $10,000 annually -- about 7% of their $140,000 income.

Steve Pomeranz, a financial planner in Boca Raton, Fla., and host of the public radio show On the Money, thinks some changes are in order. For starters, Robert needs to be more hands-off with the couple's portfolio.

"He's chasing performance, and that will get him into big trouble," Pomeranz says.

Robert has to back away from that all-stock allocation too. Last, he should keep working a little longer for the couple to have the retirement they want, Pomeranz says.


Diversify investments. The Baumans' $1.2 million retirement portfolio is invested too heavily in stocks, says Pomeranz, and too heavily in certain types, such as a 60% large-cap stake.

Pomeranz and his colleague Craig Jaffe suggest that the Baumans put 80% of their money in stock index mutual funds and exchange-traded funds, mixing growth and value stocks; large-, mid-, and small-caps; and international stocks. The rest should go into bond ETFs and cash. Closer to retirement, the planners say, the Baumans should have a 60/40 ratio of stocks to bonds.

The initial 80/20 mix is aggressive for people in their fifties, but not off the charts; T. Rowe Price's Retirement 2025 Fund, for people retiring in 11 years, has a 75/25 mix. Pomeranz says an 80% stock portfolio isn't right for everyone the Baumans' ages, but is appropriate for the couple, given the priority they place on retiring early, plus Robert's comfort with risk, as evidenced by his current all-stock portfolio.

If the markets don't cooperate, says the planner, the couple would have to revise their plans by saving more, working longer, or living on less in retirement. Robert opts for a slightly safer 75/25 mix, which Pomeranz and Jaffe say should keep the couple on track.

Boost savings. Robert puts 6% of his income in his 401(k); that and his company's match add up to $14,300 annually. In 2014 workers can put up to $17,500 of their own money in a 401(k), and Robert can add $5,500 more with the catch-up contribution permitted workers 50 and older.

While the Baumans can't control the market's return, they can improve their odds of success by saving more. Pomeranz suggests raising Robert's total contribution to at least $20,000 a year. A much-needed car purchase gets in the way this year, but the Baumans hope to get started in 2015.

Stay on the job. Even with extra savings, says Pomeranz, Robert needs to work full-time until he's at least 62, and then half-time for four years. The portfolio and Social Security should give the couple the inflation-adjusted equivalent of their current income.

While conventional wisdom suggests retirees need only 70% to 80% of their pre-retirement income, Pomeranz's experience leads him to believe that the Baumans' spending is more likely to grow in early retirement than it is to shrink. "People want to be active," he says. "It's a whole new world out there."

The Baumans are not disappointed by the prospect of delaying retirement by a couple of years. "That's still better than hearing that you can't retire until you're 70," Robert says. "We'll see how it goes."