NEW YORK (Money Magazine) - It's been a rough few years for the Healy family of Amherst, N.Y.

First, Bill, 45, was laid off from his job at the Buffalo VA medical center, where wife Kathy, 48, still works as a nurse in the intensive-care unit.

The family of six had to get by on Kathy's income and a paycheck from Bill's part-time job while he went back to school to earn his teaching certification.

He eventually found a teaching job.

But there's been more bad news: This past February, Bill's father passed away.

Bill's dad left the family $90,000 in his will. The money is still parked in a credit union account.

"I think we're at a stall," says Kathy.

They know they shouldn't keep that much money in savings, but given all they've been through financially, Kathy and Bill aren't sure just how much they want to put at risk in the stock market. And how much goes toward retirement, and how much into college savings for Kaitlyn, 19, Sarah, 17, Peter, 15, and Jaclyn, 11?

Enter Diane Pearson of Legend Financial Advisors in Pittsburgh.

Pearson agrees with the Healys that it makes sense to use some of the money as an emergency savings cushion.

She recommends putting six months' worth of expenses -- $33,000 -- in a money-market account and short-term CDs.

After that, Pearson thinks that about $17,000 can go into the low-cost New York State 529 college savings plan. (The Healys already have $20,000 there.)

The bigger priority is retirement -- after all, there's no financial aid for that. So the remaining $40,000 goes into mutual funds.

With at least 15 years to go until retirement, the Healys should keep 85 percent of their long-term savings -- the $40,000 combined with the $115,000 or so in their public-employee savings accounts -- in stocks, says Pearson.

They already have some solid blue-chip, small-cap and foreign funds through their plans, so the new cash can go into choices their plans don't offer.

Pearson likes the midcap Muhlenkamp (MUHLX) fund and says the Healys can reduce risk even further by adding investments that tend to zig when the rest of the market zags.

That could include real estate funds as well as T. Rowe Price New Era (PRNEX), a natural-resources fund.

With interest rates low and poised to rise, Pearson suggests a conservative bond investment for the other 15 percent of their portfolio. Vanguard Short-Term Bond Index (VBISX) fits that bill.