Your 40s: Time To Focus on the Financial Future

It quickly becomes apparent from conversation with John Kazanjian that he has an entrepreneur's spirit and a missionary's heart. A 48-year-old father of five, he owns and operates two successful businesses in the university town of Ann Arbor, Michigan: John's Pack & Ship and Busybody's Student Laundry. His wife, Michelle, whom he met while both were students at the University of Michigan (she was first in her nursing class; John, an economics major, says he graduated "magna cum lucky"), matches him in energy and initiative. Starting when their oldest, Mary Beth, was grade-school age, Michelle has homeschooled all five daughters (Mary Beth, 21, who graduated in June; Ani, 20, a premed student at Johns Hopkins; Gina, 17; Christianne, 15; and Tasha, 11). Michelle also helped found and run a homeschooling collective geared toward high school that has grown to 300 students.

But for all their successes, the Kazanjians face challenges familiar to many Americans who have seen their hard work and diligent savings torpedoed by the financial crisis. Like the Kazanjians, you may need to get serious about establishing a financial plan. In your late 40s, you've got time to get back on track; but not much room for error. As life spans increase, you will need more money to last through retirement. Yet the sources of that money are drying up: Company pensions are disappearing, Social Security needs an overhaul, and family nest eggs have been shattered by the market plunge. Your biggest investment, your house, is worth a lot less than it was two years ago. And even as your net worth shrinks, your expenses grow: Anyone with college-bound children is painfully aware that tuition costs have kept on climbing right through the recession.

Working longer is one option. John relishes his work so much he says he wants to "keep at it, even part-time, forever, even the last day of my life." Twenty years ago, when he was working in commercial real estate leasing, he learned of a packing and shipping business for sale and gave it try. He eventually won the contract for moving and storing services for students at the University of Michigan. Eight years ago, at the suggestion of a student's mother, he started offering to clean clothes as well as store them. "I always heard in Ann Arbor if you hitch your wagon to the university, you'll have a good, long ride," he says, and business has remained steady in spite of the recession.

He is proud that he has not laid off any full-time employees in 20 years. The flexible school year schedule allows John, an Armenian American, to travel about four weeks of the year for his missionary work involving peace and reconciliation. He's traveled to Turkey 20 times and has volunteered in Lebanon and Liberia.
"This is what really 'cranks my tractor' — the work outside my work," offers John, who donates a significant portion of his income to charity. "I'm motivated to make money, don't get me wrong, but doing well in my business gives me the opportunity to do the other things I love to do."

The Kazanjians' retirement savings, invested in what John acknowledges was a "scattershot approach," took a huge hit last year. Even after the rebound, their portfolio is now worth just $59,800. The couple's major investment, a second home in Florida, has also plunged in value, and they face $5,000 in monthly upkeep for it. Tuition bills loom for their three youngest daughters, and the Kazanjians have no college savings set aside.

Jill Schlesinger, MoneyWatch.com editor-at-large and a certified financial planner, analyzed the Kazanjians' finances and came away with a list of urgent recommendations. "John and Michelle need to focus on steadying their financial life," she says. They can achieve their goals, but it won't be a painless process. Schlesinger's advice focused on the Kazanjians, but if you face similar financial challenges, the strategy applies to you as well.

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