(MONEY Magazine) – WHEN JOHN WEHRLE RETIRED IN 1998 AFTER 30 YEARS OF teaching at public schools in Montgomery County, Md., he was overjoyed to finally be free to spend time with his teenage son Matthew. At 52, John was young enough to indulge his passion for sailing and the horses that he and his wife Nancy kept for Matthew in a small backyard stable. Nancy, one year older and also a schoolteacher, planned to retire in three years, and their combined pensions and IRAs, swelled by a booming stock market, would bring them a comfortable income of more than $100,000 a year.

But on the morning of Feb. 20, 1999, they found Matthew dead in the barn from an accidental fall. He was 16 years old. Their shock and grief were accentuated by bewilderment that such a tragedy could strike them twice: John's 14-year-old son from his first marriage had been killed 16 years earlier by a drunk driver.

After Matthew's death, Nancy retired immediately. The couple tried everything to ease the pain. They bought a new car, a yellow Volkswagen Beetle. They tore apart their kitchen and installed new cabinets and tile floors--"our therapy," Nancy called it. They took long trips to the Amazon, France and Spain.

But as the years passed, nothing seemed to fill the void. Back when they were engrossed in their teaching and Matthew's laugh echoed through their house, life had purpose, meaning. Now it had none. "We realized that we had to either fold up the tent and die ourselves," says John, "or we had to do something."

In 2002 the Wehrles did something. After reading about a program that places foreign orphans with American families, they immediately realized what was missing. Within weeks they started the adoption process for two Russian orphans--Katya Elizabeth, now 16, and her brother Alex, 13--and last year they adopted a third, Katya Marie, 17.

Most retirees would never dream of taking in three older children who spoke no English and came from troubled homes. But the Wehrles had a strong feeling that these were good kids who just needed a break--and the next few months proved them right. Suddenly, that elusive sense of purpose returned. "We thought all along that a door would open for us," says Nancy. "This was it."

After a few predictable adjustment problems, the whole family is thriving today. And Nancy and John, now 61 and 60, would seem to be on a solid financial footing with a net worth of $1.4 million. But their retirement plan, built for empty-nesters, is now cracking under the weight of supporting three active teenagers. Expenses are running so high that the couple have a monthly shortfall they cover with credit cards. They have no coherent budget, no liquid savings, no way to pay down $28,000 in debt and no money for college expenses that could start as soon as next year for Katya Marie. Says Mark Joseph, a financial planner in Reston, Va. who recently met with the family: "It's awesome what the Wehrles have done with these kids, but they have a serious cash-flow crunch coming and no safety valve."

When John and Nancy met in 1972, both were teachers at Cabin John Junior High in Montgomery County, just north of Washington, D.C. He taught ninth-grade history; she taught seventh-grade geography. He was going through a divorce but felt ready to try again. Their first date was a sailing expedition on John's Sunfish. Two years later, they were married and bought a tiny, 380-square-foot house on 2.5 acres in rural Laytonsville, Md. for $30,000.

They were both very close to John Jr., John's son from his first marriage, who lived with the boy's mother in Georgia. When he was 12, they took him on a bicycling trip through Europe and, soon after Matthew was born, invited him to Maryland for the summer. Shortly after returning home, John was riding his bike to football practice when he was hit and killed by a drunk driver. "I was really angry for a long time," says his father.

When Matthew was four, the Wehrles got a Chincoteague pony, and their son grew into a talented rider who performed well in regional competitions. By age 16, he was a strapping six-foot-two, 220-pound athlete who excelled at lacrosse. "He loved life, just like John did," says his dad. One morning Matthew went out to the barn. In a freak accident, he fell and broke his neck, dying instantly. "I thought I had a guarantee with Matthew," says John. "If you lose one kid, you don't expect to lose another. I thought the odds were pretty good of seeing him through."

Meanwhile, Katya Elizabeth and Alex were enduring life-and-death struggles of their own in a small city near Moscow. In post-Soviet Russia, food had disappeared from store shelves and jobs had dried up. Both of their parents drank heavily, and Alex was afraid of his father, so their grandmother took them in. Three years later, when she became ill, she brought them to a shelter for abandoned children.

Fast-forward another three years, to when the Wehrles read about a program in Washington, D.C. called Kidsave that works to place older orphans from other countries with families in the U.S. Wondering if perhaps adoption would be the answer, John contacted the group, and a few days later the Wehrles visited the home of an American family hosting Katya Elizabeth and Alex while Kidsave searched for suitable parents. "It was very awkward," Nancy recalls. "We were all eating sauerkraut and hot dogs and looking at them, thinking, 'Could they be our children?' And they were looking at us like, 'Could they be our parents?'"

The Wehrles enjoyed the kids so much that they invited them to go sailing and, shortly thereafter, to stay with them overnight (a highlight: showing them how to mount Matthew's old horse, Sassy Joe Sizzler). One day while the children were swimming in a pool at a marina in Baltimore, the Wehrles asked their translator to pose a question: Would they like to be adopted? Katya Elizabeth and Alex nodded their heads excitedly, and everybody laughed and exchanged hugs. The kids jumped back into the pool but then climbed back out a short while later and said something to the translator.

"The children have a question," she said. "Is it forever?"

Following the death of a loved one, experts say, there is often a great temptation to ease the pain by spending. That's what happened to the Wehrles--twice. After John Jr.'s death, they paid off the $20,000 remaining on their mortgage with a settlement received from the drunk driver's insurer. But they were soon back in debt with a second mortgage of $60,000, used to add a living room, dining room, bedroom and bathroom to their tiny house. In 1993 their mortgage went up again when they borrowed $40,000 to buy their sailboat, a 35-foot Hinckley Pilot.

When Matthew died in 1999, they suddenly found themselves with $110,000 they wished they didn't have--$60,000 from his college fund and the rest from life insurance. "We were in a black hole for a long time," says Nancy. A friend whose wife died unexpectedly said buying a new car made him feel better, so the Wehrles purchased their VW beetle for $19,000. Later they spent another $50,000 on more home renovations. "I know they say to save for a rainy day," says Nancy. "But for us, it was already raining."

The sun came out again after the Wehrles adopted Katya Elizabeth and Alex. When their new daughter needed tutoring in basic math, biology and geography, the couple's teaching skills came in handy. Alex had trouble focusing, so the Wehrles got help from a social worker, which has done wonders. Now ask him about his interests and he says excitedly, in perfect English, "I love that question--I want to be a gymnast!" Katya Marie, a friend of Katya Elizabeth's from the Russian shelter whom the Wehrles adopted two years later, excels at the piano and has just joined her high school's cross-country running team.

But the adoption process is also quite expensive: The Wehrles spent $50,000 in all. About $20,000 came from another refinancing (bringing their mortgage to $120,000); an equal amount came from a home-equity line of credit. Eventually the Wehrles will recoup most of the adoption costs through tax credits, but so far the savings have been sucked up by monthly living expenses rather than paying down their debts. And that's not even counting the normal costs of raising teenagers, which soar higher when riding outfits for the girls go for $500; hay for their three horses costs $1,000 a year; and the slip for the sailboat runs $3,000 a year. And don't get Nancy started about the $100 monthly allergy shots for their dog Lucky.

Fortunately, the Wehrles had built up a considerable nest egg in IRAs, worth over half a million dollars when they retired. They invested half the money in an annuity that pays $30,000 a year through 2009 to complement the $80,000 they get from their pensions. They recently shifted the remainder of their IRA, worth $316,000, into an annuity that will pay $15,000 a year for the rest of their lives. And starting next year for Nancy and the following year for John, they'll begin receiving Social Security benefits that will give them another $36,000 or so a year.

That will bring their total annual income to $125,000, which seems like a decent amount for a family of five. But the Wehrles are less than vigilant about their spending. They use credit cards for most purchases to gain frequent-flier miles--they charged part of a recent trip to Russia that John took with Katya Marie--but they don't pay off the balance in full every month. "My philosophy is to be careful and hope for the best," says Nancy. "I think you give yourself a lot of anxiety if you worry about writing down every penny you spend."

The Advice

That remark is a good summation of the family's biggest problem, says financial planner Joseph. He sees a serious crisis looming for the Wehrles as they sink deeper into debt and are less able financially to help the children launch their adult lives. Here is what he suggests:

• Lay off the plastic. It's great that the Wehrles visit Russia with the kids, buy riding outfits and take them sailing, says Joseph. But the truth is, they simply can't afford it all. First step: Stop using credit cards for two months. Paying with cash will force the Wehrles to get a handle on their spending. "They're coming to the end of the line in terms of liquidity," he says. "And they should deal with it now, not wait for the problems to get worse."

• Pay off debt and start saving. Joseph urges the couple to sell their only stockholding ($4,000 worth of shares in online media company Real Networks), and then use the proceeds to pay off their credit cards and start an emergency fund. Every month they should shift an additional $375 into the account, which will enable their emergency fund to grow to nearly $10,000 in two years, enough to cover at least one month of living expenses. They should also start a 529 college plan for Alex: $790 per month would fund four years at a state university in Maryland. The girls should hunt for scholarships.

• Beef up insurance. The Wehrles took higher pension payouts in exchange for giving up survivor benefits. So if anything were to happen to either of them, that person's pension would end and the family's income would drop sharply. Normally, retirees in their sixties begin to lighten up on life insurance, but in this case Joseph recommends increasing their coverage from $270,000 each now to $950,000 for John and $750,000 for Nancy. True, that would raise their premiums sharply, from $184 a month to $496 for a 15-year term policy. But if any family knows that death can happen anytime, it's this one.

• Sell some assets. Yes, the Wehrles have an impressive $1.5 million in assets, but nearly all of it is illiquid. Their home is worth $650,000, but they don't want to move. Their adjoining property is valued at $400,000, but Katya Elizabeth, who hopes for an equestrian career, uses it daily to practice for horseback riding competitions. Selling their sailboat for $100,000 would solve several problems at once: They could pay off their home-equity line ($25,000), establish emergency savings ($10,000) and fully fund Alex's college education ($65,000). Meanwhile, saving boat maintenance costs ($5,000) could pay for Katya Marie's community college each year.

But John and Nancy fell in love on a sailboat and say it provides a crucial release from stress. Says Nancy: "If we sold it, we'd have to work in the cost of the insane asylum for me and John both."

• Don't tap into the IRA. The Wehrles' recent decision to shift the $316,000 remaining in their IRA into an annuity was a bad idea and should be reversed immediately, Joseph says. Yes, the $15,000 a year in extra income will come in handy, but the cost is too steep, with annuity fees that could run as high as 3% a year. Plus, the couple could find themselves without any remaining nest egg to tap in emergencies. And they will forfeit part of their child tax credits because their income will rise above the limits. Joseph believes that the Wehrles would be better off getting their spending under control and investing their remaining savings in a mix of stock and bond funds to help pay for potential long-term health costs when they get older.

John and Nancy say they appreciate Joseph's advice. But beyond selling their stock and perhaps buying additional life insurance, they are not sure how much of it they will act on. They can squeeze by on their pensions and annuities, they say, and they have faith that their kids will find a way to get an education with scholarships, loans, jobs and whatever cash they can set aside.

In the meantime, they will continue giving their children something that they seem to have an inexhaustible supply of, something the kids feel every time they glance at the painting in the Wehrles' dining room of a landscape at dusk with two stars piercing the sky. John bought it shortly after Matthew's death because the stars reminded him of his two sons. The scene gave him a strange sense of lightness and calm. Later the artist told him the stars are Venus and Jupiter, which rarely align in this manner. One such time was Feb. 20, 1999, the day he made the painting. That was also the day Matthew died.

Today the painting makes John and Nancy feel their son is still very much alive. And when their Russian kids have bad days, when past traumas come back to haunt them, the flickering stars remind them that yes, this time it is forever.

THE BOTTOM LINE

Generous teacher pensions help the Wehrles afford their second family. But if they're not careful, their lavish spending on sailing, horses and other hobbies could spell financial trouble.

WHY YOU CAN'T SPEND YOUR WAY OUT OF GRIEF

It's easy to let your personal tragedy spiral into financial disaster. Don't go there.

You lost your job. Got divorced. A loved one died. Financial planners and therapists say the impulse to bury the pain in a frenzy of buying can be strong. That won't heal the hurt, but it will leave you with maxed-out credit cards and a lot of stuff you don't need. Instead:

• Put a brake on spending.

Delay major purchases for six months to a year after a traumatic event. Once the initial shock has passed, you may not be so keen to drive that lime-green sports car after all.

• Seek out advice.

If you must make big money decisions while you're still reeling, meet with a financial planner who can provide perspective about how to proceed. "Right after 9/11, a lot of people bought way more life insurance than they needed," says Olivia Mellan, a psychotherapist who specializes in money issues.

• Avoid risk.

You may be tempted to shake yourself out of your torpor by acting on a stock tip or changing jobs. There are times for risk-taking; when you've been dealt a bad hand is not one of them.

• Spend time, not money.

Involvement with your community, friends and personal interests will do a lot more to help usher in a lasting emotional recovery than reckless spending.