(MONEY Magazine) – Like many young families, the Geisses of Taylor, Mich. strive to stay balanced even as they're in constant motion. David, 37, is a company lawyer and handles private clients too; Jennifer, also 37, teaches high school part time and ferries Kyle, 10, and Jay, 7, to soccer and gymnastics. And both parents always seem to be chasing after 17-month-old Evan.

Hectic as day-to-day life is, the couple try to stay focused on the long term. They're committed to saving—David puts the maximum $14,000 into his 401(k), and the Geisses have managed to sock away $105,000 toward their retirement and $27,000 in college savings for their three boys.

But David, who has always done the family's financial planning, put together most of their portfolio eight years ago and has done little to adjust it since. Now the Geisses have a fairly risky brew in David's 401(k) and in their rollover IRAs from past jobs. "You have to rebalance, and I traditionally haven't done that well," David admits. Almost their whole retirement portfolio is in stocks, with 45% in volatile small and mid-size companies. "As I got older," he says, "I was going to convert into more conservative things."

That's just what New York City-based financial planner Lew Altfest suggests that the Geisses do. Altfest has drawn up a retirement plan that's 60% equities and 40% fixed income and that takes into account the mutual funds available to David in his 401(k). (The boys' college money is allocated properly for their ages, Altfest says.)

Such a classic 60-40 split might seem a bit conservative, given the Geisses' young ages. But Jennifer wants less risk, and David's job comes with no small measure of it: He's the general counsel for a small Detroit-area technology company that pays him in part with stock options. Increasingly, financial planners suggest that people think about diversification in their entire financial lives, rather than just in their stock and bond portfolios.

For the Geisses, step one is lessening their exposure to small-company stocks. Altfest recommends whittling their stake in Fidelity Low-Priced Stock, which makes up 26% of their portfolio. Same for midcaps. About 11% of the couple's money is in Fidelity Aggressive Growth, a poor performer that Altfest wants to sell. He recommends the more conservative Lord Abbett Mid-Cap Value and Delafield funds. One more cut: The couple should reduce their large-cap position to about 16% of the portfolio, says Altfest, and scoop up Oakmark, which buys value stocks that are out of favor today.

There are two equity sectors in which the couple need to invest more. Altfest suggests Tweedy Browne Global Value to increase their exposure to non-U.S. stocks. And the planner would put 10% of the portfolio into investments such as Third Avenue Real Estate Value that don't track the stock market's swings. (That fund, like Delafield, is one of the MONEY 50, our list of the best mutual funds.)

After lightening up on stocks, the Geisses should bulk up on short- and intermediate-term bond funds such as Pimco Low Duration and Vanguard GNMA. Altfest wants them to go light on long-term bonds, which are the most sensitive to rising interest rates. For extra protection, he would add an inflation-indexed bond fund (the MONEY 50's Vanguard Inflation-Protected Securities) and a high-yield fund, Pimco All Asset.

Altfest applauds the couple's commitment to saving but says they'll need to do more. David wants to fund half of his children's college education, but to hit that mark the Geisses would have to put away another $950 a month. Even with a family income of $180,000, David says, that could be tough, but they hope to start chipping in more this year. And soon enough, Altfest says, they'll need to start saving more for retirement. Jennifer, however, will likely return to work full time when Evan reaches school age. That won't make daily life any less crazed, but it will make it easier for the Geisses to balance their savings and long-term goals.

GOAL: Save for retirement and college

PROGRESS: $105,000 in IRAs, 401(k) $27,000 in college savings

RECOMMENDATION: The couple need to move some of their retirement money out of riskier market sectors and add to their fixed-income investments.