Real Life: The Cadelinias

Your 50s: Saving Money, Reviving Your Business

With a thriving small business, college bills all paid, and a handsome nest egg, Sam and Myrna Cadelinia thought they had it made. Then the financial crisis slammed the business, and the market crash melted their savings. Here's how they can rein in their spending and get their retirement savings back on track.

Sam Cadelinia figured he had already weathered the worst that a bad economy could hand him. As head of a thriving San Francisco real estate agency in 1994, he had watched as housing prices dropped 25 percent, and his income dried up along with sales. "I had to sell everything," he says: "My Porsche, a boat, income property." The future looked grim for the family — his wife Myrna and three children. "I still have a note from my son Loren, who was 9 years old at the time, taped to my desk," says Cadelinia. It read, "Dear Family, I love you. Even if we lose our house. I always pray for you. If we have to sacrifice, then that’s what we have to do."

Cadelinia picked up the pieces, however, and by 2000 his agency, which he owns with a partner, was successful enough to catch the attention of Prudential, which brought his firm under its umbrella. He rode high on the real estate boom, earning $288,000 in 2008. He didn’t indulge in a Porsche or a boat this time, but, he says, "We had a lot of fun during the golden age of real estate." Fun included the gradual acquisition of a $1.1 million numismatic collection, jewelry purchases, lavish vacations, and dinners out practically every night of the week. More prosaically, the Cadelinias paid all college expenses for their sons, Brandon, 32, and Loren, 25, and daughter Rhiannon, 22, who graduated this June.

Such prodigious spending kept Sam and Myrna, who both turn 60 in 2009, from accumulating a big retirement fund. They had about $710,00 in a stock portfolio and an annuity. Until recently, however, they weren’t worried. Although Myrna was planning to retire at 65, her husband figured that with his business going strong, he could keep raking in money until they were in their 70s. What’s more, they were stowing $30,000 in savings each year. "After our youngest graduated, we planned to boost that to $60,000 a year," says Cadelinia.

Then, the economy blew up, especially real estate. Cadelinia’s business is struggling; he and his partner have had to cut employees’ hours, and his income this year plummeted to $61,000. The Cadelinias have stayed afloat, thanks partly to Myrna’s $25,000-a-year job as a teacher’s aide and Sam’s moonlighting as a college instructor and bank director. They have slashed the luxuries of yesteryear, but they had to draw $80,000 from an annuity to pay taxes and to get rid of some debts, and take another $100,000 from a savings account to meet expenses. All that, and the decline in the stock market, reduced the couple’s retirement fund to $475,000.

As he sees it, Sam has three major challenges, and they may be similar to those you’re confronting. Like other entrepreneurs, he wants to know how his business can flourish in a difficult economic environment. He wants help on saving more. And, he wonders, how can they build a big enough retirement fund to support their lifestyle in retirement? To help the Cadelinias — and you — conquer small business and personal finance challenges, MoneyWatch consulted experts in both areas. Click on the links below to see their advice.

• Create a Budget, Build a Nest Egg
• Beef Up Retirement Savings
• Rebuilding a Small Business