If you're like most people, retirement is something that's easy to put off thinking about until tomorrow. But "tomorrow" often comes sooner than we expect. While you can't control the passage of time, you can take action when it comes to planning for the future.

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Retirement tip No. 1: Start early
Most people spend more time planning their vacation than planning for their retirement. But really, retirement is the ultimate vacation. And one of the best strategies for retirement planning is to start planning, start saving and start now. By taking action early, time can become your greatest ally.

Retirement tip No. 2: Social Security won't be enough
Financial experts say a person would need as much as 80 percent of his/her final year's working salary each year during retirement to maintain his/her lifestyle.

But Social Security only accounts for about 40 percent of the average retiree's income. In fact, if an individual were to retire in 2007, Social Security would only pay that person about $955 a month on average.

Retirement tip No. 3: Participate in tax-qualified voluntary plans
403(b), 457(b) or other tax-qualified plans are a powerful tool to help build your retirement savings. And since your contributions to these plans are made by convenient payroll deduction, saving is almost effortless.

In fact, payroll deduction is also a great way to pay yourself first -- the most important rule of personal cash management. Participating in your school district's plan is a convenient way to help reach your retirement dreams. Your plan contributions are invested in a tax-deferred annuity, which is a long-term investment. Eventually, you'll pay income taxes on the money when it's withdrawn. Federal restrictions and a 10 percent federal tax penalty can apply -- depending on your plan -- to withdrawals prior to age 59.

Retirement tip No. 4: Identify your goals and develop a plan
When do you want to retire? What do you want to do during retirement? Travel? Maybe buy a vacation home? It's fun to dream about the future, but creating a plan to make those dreams a reality is serious business. Many people put it off because it seems complicated, but retirement planning isn't as difficult as you might think.

Retirement tip No. 5: Make sure you'll reach your goal
The last thing you want to discover after you retire is that you don't have enough money. Generally, there are three sources of retirement income: Social Security, your employer's retirement/pension plan and your personal savings. Calculate how much you'll receive from these three sources and compare that figure to how much your retirement plans will cost. If your plans cost more, you have a gap.

Retirement tip No. 6: Save before you pay taxes
Saving for retirement in a taxable savings account is OK. But if your employer offers a 401(k), 403(b), 457(b) or similar plan, you can save before your money is taxed. This way, the full amount goes to work for you right away, which can help you build your savings faster. Remember that investment values will fluctuate so that your investment, when redeemed, can be worth more or less than its original cost.

If you're in the 25 percent tax bracket, putting $100 into a taxable account costs you $100. But (assuming the same tax bracket) saving $100 in a pre-tax retirement account -- because the money is deposited before taxes are taken out of it -- only costs you $75.

Retirement tip No. 7: Save in a tax-deferred account
In a taxable account, taxes continually eat away at your interest and earnings. But with a tax-deferred account -- such as a traditional IRA, a nonqualified variable annuity or your workplace 401(k), 403(b) or 457(b) plan -- all taxes on interest and earnings are deferred until withdrawal, usually at retirement. Over time, the difference can be substantial.

Retirement tip No. 8: Determine how much risk you can accept
Investment risk is simply the possibility that an investment's value will go up or down. Your ability to accept risk is based partly on your personality, but it also is influenced by your current financial situation, need for liquidity, investment preferences, time horizon and other factors. Knowing your risk tolerance level is a key component to successful retirement planning, because it helps determine what kinds of investments best suit your particular financial situation.

Retirement tip No. 9: Diversify your investment portfolio
One of the most common investment terms youll need to understand is diversification, the solution to the risk/return trade-off problem. This means that to get a higher return on an investment, you will likely assume a correspondingly higher risk. Investments associated with the greatest risk historically have had the highest return. Investments with the lowest risk historically have generated the lowest return. One way of maximizing return while maintaining or minimizing risk -- and still staying within your risk tolerance level -- is to diversify. In short, diversification involves making sure that all your eggs dont end up in one basket.

Retirement tip No. 10: Take advantage of asset allocation
Many people think the key to successful retirement planning is picking the "hot" performing investments. The truth is, even the experts rarely pick consistent winners. Studies show that the real key is asset allocation -- the science of selecting the right types of investments in the right proportions. In the past, it's taken a doctorate in mathematics to apply the principles of asset allocation. In fact, the developers of the formula won a Nobel Prize. Fortunately, new computer-based programs can help you identify suitable asset allocation based on your risk tolerance.

Keep in mind that neither asset allocation nor diversification ensures a profit or protects against market loss.

Retirement tip No. 11: Keep ahead of inflation
One of the hidden risks of investing is inflation. Inflation eats away at the purchasing power of your investments. So your first reaction might be to put your money in fixed-rate investments like bonds or T-bills. But you might be surprised to learn that inflation affects these types of investments more, and has less long-term impact on seemingly riskier investments like stocks or stock funds. The answer isn't to put all your money into "safe" or "risky" investments. A blend of investments -- some riskier, some safer -- is the key to helping beat inflation.

Retirement tip No. 12: Stay invested
Hopping in and out of investment markets, hoping to catch a big increase or avoid a big drop in value, is itself a strategy. Even the experts have trouble gauging the markets. You not only put your retirement savings in jeopardy, but you might also get hit with the hefty federal penalties that apply to early withdrawals on tax-deferred accounts. It's smart to take a long-term view when youre investing for retirement.

Retirement tip No. 12: You're halfway there
Applying these tips to your financial planning process can mean, in a very real sense, that you're halfway to your goal. You'll have set clearly defined and attainable goals; you'll have a plan for funding those goals; you'll know how to invest appropriately, and you'll know you've begun accumulating the money you'll need during retirement.