The cartoon shows a man sitting at his kitchen table, coffee cup in hand, looking over his retirement statement. The caption reads: "According to your latest figures, if you retire today, you could live very, very comfortably until 2:00 p.m. tomorrow." Accumulating enough money for a comfortable retirement doesn't happen by accident. And procrastination carries a heavy cost. On the other hand, developing a realistic long-term plan that takes into account your financial needs and personal goals provides tremendous benefits.

For most of us, the likelihood of enjoying our preferred life-style during retirement is heavily dependent on steps we take years before we move into that season of life. The following three financial steps are among the most important you can take before reaching retirement to help guarantee that your retirement life-style will meet your expectations.

1. Be completely debt-free at your target retirement age. This includes your home mortgage and any college debt you may have incurred for your children. Debt, especially a high mortgage payment, limits investment options and life-style flexibility. If you need to add additional principle to today's monthly mortgage payment to pay it off by retirement, do it!

2. Maximize your contributions to your company's retirement plan, such as a 401(k). Hopefully you realize that Social Security will not meet 100% of your retirement needs. Public policy continues to move towards individuals becoming increasingly more responsible for funding their own retirement. The tax-deferred investment growth and savings discipline that occurs inside your company's retirement plan is hard to beat. Contributing to an IRA is also a good idea, especially if you're already taking full advantage of any matching within your company retirement plan.

3. Establish a savings/emergency fund. In other words, build your personal liquidity. Why is this important? First, it buys you time. Personal savings will allow you to postpone tapping into your retirement savings for monthly living expenses after the paychecks stop coming in. You will have adequate time to reposition your retirement investment assets, if necessary, and let them continue to grow tax-free. Second, it provides efficiency. If you need $20,000 for a new car, you won't have to take $30,000 out of your retirement funds, pay $10,000 in income taxes, and then have $20,000 left to spend for a car. Again, this allows your long-term investments to continue growing tax-deferred.

A "Total Return" Approach

"How am I going to replace that monthly paycheck?" is frequently the first question a newly retired person has. But, is it the right question to ask first? We believe it's merely one of a series of questions that, correctly answered, lead to good investment decisions. Instead of focusing immediately on income, a more appropriate starting point is determining which is a greater concern to you ? the short-term risk of market volatility and potentially losing principal in the short run, or losing purchasing power to inflation over your retirement lifetime?