The Golden Years? Make sure they live up to that name.

When planning for retirement, there are several key factors to consider. You need to have a solid understanding of time frame, your retirement goals, the time value of money, and your likely investment performance. Confronting these will allow you the power of financial security in the years to come.

Good retirement planning means you won't be worried about living too long. Forget about trying to guess how long you are going to live. If you want to gamble, go to Vegas. Plan to have enough of a nest egg so that you can live on 6-8% of it in the form of investment income, and re-invest the rest of the gains in order to continually grow that nest egg and give yourself a yearly cost-of-living increase. That also means you can leave a substantial inheritance for your family, start a foundation, or give it to charities you believe in.

When all of the toil is through, what do you want to be when you grow up, and what do you want to do? Take some time to sit in a quiet place and meditate on it. Picture what you want to do in the average day, month, and year of your retirement. Consider these questions, and think of more. Make a list.

This is probably the most critical long-term financial planning step that people forget about. Guess what? That million dollar nest egg you're thinking about now won't be worth nearly as much in the years to come. It's called inflation, and it's the silent killer unless you admit it exists and confront it.

Let's be conservative and suppose that inflation will average around 3% over the next 30 years, which is when you want to retire. Your million dollar nest egg will only be worth $412,000 in today's money. Let's get a little more realistic...since the US Government likes to arbitrarily exclude important items from their CPI and inflation numbers like energy costs, let's assume a 4-5% average rate of real inflation. At 4% your cool million is worth $308,000 in that same 30 years, and at 5% it's only worth $231,000. Now, try to live on that for 20-30 years, during which time the buying power of that money will also be going down constantly. Good luck.

Inflation is serious, and it's real. These aren't theories. What could you buy with $100 in the 70's? What can you buy with $100 today? Make a food shopping list with prices for those two time periods; you'll see the difference.

Now, imagine that you are living out those retirement dreams you listed, today. The cost of the things you want to buy are the same as they are now. What kind of annual income would you need to support that lifestyle? Now, if you're going to retire in 20 years, take that income number times .377, for 30 years .231, and for 40 years .142. The result is what you'd actually be making in terms of the value of a dollar. So a $100,000 annual income that looks great now will look more like $23,100 in 30 years. Yikes! Those decimal numbers are factors of present value at 5% inflation, and they are real. Even with some changes in that rate towards the lucky side, the impact is staggering to your future wealth.

The opposite of present value is future value. It's just another way of looking at the same situation. Let's say you wanted to have $100,000 a year in your dream retirement scenario. If it's 20 years multiply it by 2.653, 30 years 4.332, and 40 years 7.040. That means you would need $265,300 a year in 20 years to have the same purchasing power as $100,000 today. Likewise, I'm talking about $433,200 in 30 years and $704,000 in 40 years. You've got to plan for these adjusted numbers!

A reasonable minimum targeted investment performance is an average of 12% over a span of 10 or more years. It could be real estate, stocks/mutual funds, or businesses. Think about that killer called inflation, and realize that a CD or any other investment that barely beats inflation (or underperforms inflation) is just not getting you anywhere. Any investment with a time horizon of 5 or more years before you need that money needs to be in something that will perform. We are not going to expound on investment options in this article, but there are a few ground rules to go by.

Don't invest in anything that doesn't have at least a 10 year track record of success. That goes for companies, mutual funds, etc. Real estate has a long track record, and so do many great mutual funds. If you are investing a great deal of money in a start-up business, the people managing that company need to have a solid background of success in that industry.

Don't invest in anything you don't understand. Learn about it first through the Internet, libraries, or brokers and financial advisers who will take the time to explain it to you and make it clear as day. If they won't do that, scream "You're Fired!" and go talk to someone else.

Lastly, here's the important part. You need to "get" this. Feel it in your bones. It's real, and it's not going away if you ignore it! Perhaps you can achieve your dream retirement by putting away 15% of your income into a 401(k) plan or other investment vehicle. Perhaps you need to put away more. If you aren't investing enough, just don't delude yourself. Your retirement won't be what you hoped, and you may even need to work through the majority of it just because you weren't smart enough to devise a plan and follow it.