Goal: 12 years, $2.5 million

NEW YORK (Money) -- Question: My wife and I are in our mid 40s and plan to retire at age 59. But we're unsure about what sort of stocks-bonds mix we should have in our retirement accounts.

With about $1.1 million in various accounts, our financial adviser says we should easily be able to meet our goal of accumulating $2.5 million by retirement, which is what we need to draw $100,000 a year in inflation-adjusted income.

We're thinking of a mix of 30 percent stocks and 70 percent bonds. Is this too conservative for someone 12 years from retirement? What mix do you recommend?

-Bill, Poughkeepsie, New York

Answer: I agree that with a little more than a decade to go until you retire, you probably won't have much trouble building your $1.1 million nest egg to $2.5 million or so, although it's no lead-pipe cinch.

You need an annual return of about 7 percent on the money you've already set aside to hit your target. I don't think that's a given with a mix of 30 percent stocks and 70 percent bonds. But if you continue to save, you should be able to pull it off.

That said, I'd think about increasing my exposure to stocks for a few reasons.

For one thing, when you're still a decade or more away from retirement, it's hard to know exactly how much annual income you'll need after you call it a career.

Sure, you can make informed estimates by filling out retirement expense worksheets. (I like the one in the expenses section of Fidelity's myPlan Retirement Quick Check calculator because it lets you divvy up your spending into various categories and factor in different rates of inflation if you wish.)

But a lot can happen over 15 years. You could (although I hope you don't) develop health problems. Or you could end up having to lend a hand to your children or other family members.

Or perhaps you'll just end up spending a lot more than you think. A lot of people tend to splurge those first few years of retirement when they have large amounts of free time. The fact that you'd be retiring at a relatively young age makes it even more likely you might do a lot of traveling or engage in other activities that can soak up the dough.

By tilting your mix more toward stocks, you can increase your chances of earning a higher return - and building a bigger nest egg that will throw off more income - without taking on undue risk.

Normally, I'd say someone your age should have roughly 75 percent to 80 percent of his assets in stocks. The fact that you're thinking of less than half that amount right now suggests to me that that's probably too high-octane a blend for you.

Fine. It's good to be realistic about your appetite for risk. At the same time, though, you don't want to be so risk-averse that you give up extra return that you could earn without taking on too much risk. So I'd suggest that you consider maybe going with a 60 percent stocks-40 percent bonds blend for now and then maybe scaling it back to 50-50 in the years just before you retire. Or, if that's too much for you, then go with the 50-50 blend now.

In any case, before you set your stocks-bonds mix, I suggest you take a look at the Asset Allocator tool on in the Tools & Calculators section of the T. Rowe Price Web site. (If you're not a T.Rowe customer, you'll have to register to use it, but there's no charge.)

You use a slider to create a specific mix - say, 30 percent stocks, 70 percent bonds in your case - then plug in information, such as how much you have invested, how much you plan on saving and how many years you plan to invest and voila! The calculator gives you the percentage chance that you'll achieve your goal. You'll also see the expected annual return for that mix, as well as the possible three-month loss.

By fiddling with the slider, you can try out a bunch of different asset mixes, not to mention different time horizons. So in addition to seeing how you would do with different stock-bond allocations, you could see how you would fare if held off retiring until 62 instead of 59.

One final note: Many people think they've got to ratchet their stock holdings way, way back once they hit retirement. But I'd advise against going too far, especially in your case. You and your wife have a good chance of spending 30 to 40 years in retirement. That means you're going to need some asset growth to maintain your purchasing power in the face of inflation. It's harder to get that asset growth if you're invested too heavily in bonds, particularly early in retirement.

To get a sense of how long your assets might last in retirement with different stock-bond mixes, I suggest you take a look at another tool on T.Rowe's site, its Retirement Income Calculator. You enter such information as the size of your nest egg, how much income you'd like to draw from it each month and how many years you think you'll draw that income. You then choose a portfolio with a stocks-bonds mix that most closely matches yours, and the calculator will give you the odds of achieving various levels of income in retirement. You can then try other stock-bond blends to see what level of income you can reasonably expect from them.

I think after playing around with these tools a bit, you'll find that you can probably go with a somewhat more daring mix than the one you have in mind while still being prudent. Indeed, I think this is a case where investing as conservatively as you're considering may actually be imprudent and could end up crimping your lifestyle in retirement.

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