(MONEY Magazine) – Drew and Heather Chapman have always been on the fast track. The couple met and married in less than six months in 2000. By their first anniversary, they had paid off nearly $14,000 in credit-card debt. And they're determined to exit the work force quickly too. Drew, a Navy aviation electronics supervisor, and Heather, a part-time MRI technologist, are saving and investing 20% of their $80,000 annual income with the hope of retiring in their mid- to late fifties.

Back when they wed, the couple wrote down a plan: If they stuck to a strict savings routine and earned an 8% annual return, they'd amass $2.7 million by 2032--enough, they believed, to retire in comfort. "I scanned that into the computer and still have a picture of it," says Drew.

Six years later, however, Drew, 33, and Heather, 29, are ready to revisit that plan. They now have two kids, Taylor, 3, and Cody, 2. And they don't know whether their original projections were off target. Can they raise a family and retire early with enough cash for travel and a second home? "I want to be young enough to do things during retirement," says Heather.

Where They Are Now

The Chapmans work hard to keep their spending in check. Heather shops at thrift stores; Drew keeps a running total of monthly expenses on the refrigerator door. As a result, they've put away $76,000, including a $7,000 emergency fund they also dip into for vacations. An enthusiastic do-it-yourself investor, Drew checks in on the portfolio twice a week. But it's a hodgepodge of investments, and he's lost track of the allocation. After Drew finishes his military service in six years, he will collect an estimated annual pension of $25,800 (adjusted regularly for inflation). Though both of the Chapmans have term life insurance, they wonder whether they should also insure Drew's Navy pension with what's known as the Survivor Benefit Plan, or SBP. That would guarantee a 55% payout for Heather if Drew were to die first.

What They Should Do

The Chapmans can indeed fund their retirement dreams with $2.7 million, says Tom Rogers, a certified financial planner in Portland, Maine. But unless they adjust their investments and save more, he gives them only a 50% chance of success. They have overestimated their portfolio's likely returns, he says, and underestimated expenses: Their tax rate will jump when Drew leaves the Navy, and household spending will rise as the kids grow up. Rogers suggests that Drew raise the contribution to his Thrift Savings Plan, the government's version of a 401(k), from 6.6% to 15%. Drew's $25,000 TSP account is invested in low-expense life-cycle funds comprising 80% stocks and 20% bonds, a mix Rogers says is fine. Here's what else needs to happen: • REIN IN AND BRANCH OUT The balance of the Chapmans' retirement portfolio, worth $44,000, is invested in stocks selected by Drew, exchange-traded funds and mutual funds. Rogers advises them to simplify their investments and cut expenses by shifting about 60% into three Vanguard stock index funds: Extended Market (VEXMX), Total Stock Market (VTSMX) and Total International (VGTSX). He suggests they add real estate, emerging markets securities and inflation-protected bonds, which will diversify the portfolio and help their returns when U.S. stocks underperform. And Rogers wants Drew to leave the stock picking to pros. • SOCK IT AWAY To afford a plush retirement complete with a vacation home, Rogers says, the Chapmans will have to earn more and save more. Drew will need a civilian job paying at least $45,000, and Heather will have to double her hours, once the kids start school, to earn $50,000. Rogers also wants them to scrimp further and put 30% of their money aside, not 20%. The payoff, he forecasts, is an 80% to 85% chance they'll make their retirement number.

Along the way, Rogers recommends the Chapmans beef up their rainy-day fund from $7,000 to $15,000. "That way," he says, "they can absorb several setbacks without getting off track."

Rogers also wants the couple to save for Taylor's and Cody's education in tax-advantaged education accounts. But Heather and Drew are wary of education-specific savings. They'd rather pass along no-strings money--say, enough for two years of college--and let their grown children spend it as they wish. • REST ASSURED For most military families, the pension SBP--government-subsidized and funded with pretax dollars--is a good deal, says Ron Pearson, a certified financial planner and former Navy captain in Virginia Beach. But for serious savers like the Chapmans, he says it's okay to skip the insurance premiums, which would amount to 6.5% of Drew's pension payout, or nearly $1,700 a year to start, as long as they invest the money instead.

Other couples might be intimidated by the extreme level of saving the Chapmans' retirement plan requires, but Drew says he's encouraged by the numbers. "When I saw we have an 80% chance of success, that made me feel really good," he says.

Yeah, but a 30% savings rate? "It should be easy to keep saving," says Drew. "We live well below our means."

the makeover

The Chapmans

MONMOUTH, MAINE

Drew, 33, a Navy chief petty officer

Heather, 29, an MRI technologist

GOALS

• Retire in 25 years

• Travel in retirement and buy a second home

• Save money for their children

ASSETS

$25,000 in a military Thrift Savings Plan

$30,000 in Roth IRAs

$21,000 in taxable accounts

The Portfolio

Adding foreign stocks, real estate and more bonds will lower risk.

14% BONDS (TRADITIONAL)

6% BONDS (INFLATION PROTECTED)

30% LARGE-CAP STOCKS

13% MIDCAP STOCKS

12% SMALL-CAP STOCKS

20% FOREIGN STOCKS

5% REAL ESTATE

Want a Money Makeover?

E-mail us at makeover@moneymail.com.