Editor's note: In The Trenches is a new column written by FA Associate Editor Jim McConville in which he'll write about how advisors solved a client's retirement planning problem. Please contact Jim at [email protected] if you are interested in participating.

Jim Cantrell's experience with clients concerned about retirement shows why so many people need financial planners.

"Very few people plan enough," says Cantrell, CFP, owner and president of Financial Strategies Inc., a Brookfield, Wisc.-based wealth advisory firm. "More people are thinking about their retirement today than when I got in the business in 1989, but I don't see most people coming in with a written plan for retirement."    

Cantrell, who is National Association of Personal Financial Advisors (Napfa) board president of the Midwest region, says he tries to get his clients to think through a plan and then commit it to writing.  

"Either people don't have any plan at all, or they have something that they've developed in their mind and it becomes their plan, but it doesn't come to clarity or is nothing solid," Cantrell says. "We always recommend that people have a written plan where we do some projections of how things might turn out, and financially how inflation and taxes and all those other things are going to affect you."

In taking on new clients seeking retirement plan help, Cantrell starts off with a list of roughly 60 questions to help gauge a client's financial situation and goals. "We spend an hour to an hour and a half and I ask lots and lots of questions."

The last series of questions Cantrell asks clients are designed to get an inkling of what clients plan to do to fill their retirement time.

"I do talk to my clients about this specific issue. I ask them questions such as, 'What are the things that interest you? What do you like to do? What do you wish you had time to do?'"

The goal here, says Cantrell, is to get clients to confront the question of how they will fill all their retirement free time.

"This may seem like a strange approach; however, many people do not plan past the idea of no longer working," Cantrell says. "They don't think about what will occupy their time once they retire."

Cantrell recalls a client who retired at age 52 with no plans on how he would spend his new free time. "He basically sat around and watched TV," Cantwell said. "I saw him a year later at his annual review. He was 53 years old, but seemed more like he was 73."

The good news, says Cantrell, is that more clients are mindful about what they are going to do after retirement. "They ask, 'What am I going to do to keep my mind active?"'

Another Cantrell retirement principle: Be proactive in planning out a precise retirement budget.

"It's something that people sometimes overlook," he says. "They forget about the fact -- especially people who are retiring prior to 65 -- they forget that health insurance is going to be a pretty substantial cost. You could be looking at $1,000 to $2,000 a month for a married couple if they have to buy their own insurance."

To enjoy a comfortable retirement, Cantrell says it's critical a client has a clear understanding in dollars and cents exactly what they'll financially need to retire "How much will you need to put away to live the lifestyle you currently enjoy, or what things do you plan to cut out?"

"Retirement should be a time of great joy and relaxation. Planning for this time in life is vital to ensure that the goals you have set will be attainable. Don't let the uncertainty of the current economic climate stop you from planning your retirement," Cantrell adds.

But clients don't necessarily always follow Cantrell's advice to the letter. Once he advised two clients who worked for a particular company to diversify their stock portfolio and sell some of their company stock. Both refused.

"That was a huge mistake. Neither one of them has fully recovered to those 1999 (stock value) levels," Cantrell said. "They refused to diversify because they had made so much money in the stocks and the stock options they had. It seemed like common sense to have some diversity, just in case."

Cantrell offers clients five tips in developing a solid financial plan for retirement.
    Know exactly what you'll do when you retire.
    Know your benefits
    Diversify your stock options.
    Move to stable investments.
    Have a solid retirement budget

-Jim McConville