You've heard scary retirement stories before -- tales of woe and angst from would-be retirees who fell short of the goal line. You've heard all about how not to plan for your golden years: spending more than you save, ineffectively drawing up your retirement goals.

But how can you retire well instead? Four simple steps will help get you there.

Step 1: Invest along the way.
Planning financially for retirement is a simple yet daunting task, and the plethora of investment vehicles and potential holdings only make it more so. But you don't have to be scared by all of these options. In fact, if you don't have time to follow individual companies on a regular basis, you're better off taking the easy way out and sidling up to some funds instead.

We at the Fool are big proponents of mutual funds with low expense ratios. They just make sense: The less money you pay to fund managers, the more money you can keep in your investments -- and you can reap greater rewards as a result.

Furthermore, the funds you hold can reflect your personal investing style, as well as your stage in life. If you've got plenty of time until retirement, you might consider funds that own more volatile -- yet potentially quite lucrative -- investments, such as the iShares Russell 2000 ETF (NYSE:IWM), which holds small- and mid-cap companies such as E*TRADE Financial (NASDAQ:ETFC), Human Genome Sciences (NASDAQ:HGSI), and 3Com (NASDAQ:COMS).

If you'd like to play it a little closer to the vest, a fund like the Vanguard Value ETF (VTV) may be more your style. With known entities such as ExxonMobil (NYSE:XOM), Wells Fargo (NYSE:WFC), and Pfizer (NASDAQ:PFE), you'll typically endure less volatility while keeping a grasp on winning companies. Not a bad deal!

Step 2: Maintain a list of your retirement goals.
But your investments won't do you any good if you have no plan for how you're going to use them. What do you want to do in retirement? Do you want to move to Maui? Spend your days volunteering at an animal shelter? Buy an Airstream and travel the world? Become a late-blooming barista at the local coffee bar?

Once you have a list of your goals and dreams -- no matter how big, small, or silly they may seem -- you can plan your finances accordingly. Are you willing to forgo other luxuries when you plunk thousands of dollars down on that RV? Exactly how much would your mortgage be in Maui? Questions like these will help guide your financial plans today.

And if your dreams and goals change through the years, no matter. Keep your list of retirement aims current, and you'll always have your eye on the prize.

Step 3: Keep some cash in short-term accounts.
While you're investing and dreaming, be sure to plunk some money where you can get to it easily. Even though you've got your mind on retirement, life continues to happen, and with it come surprises. By socking some cash away in short-term vehicles such as money market accounts, certificates of deposit, and plain ol' run-of-the-mill savings accounts, you'll be ready for the unexpected even if the market is taking one of its customary naps.

Step 4: Sit back and enjoy the ride.
Once you lay the groundwork for your retirement goals and plans, keep an eye on them; even index funds and other, more hands-off holdings need attention from time to time. If you find you're going in an unfavorable direction, either with your investment decisions or your long-term goals, then take care to change them. It's your future, after all; no sense in sitting idly by and watching your plans go down the wrong road.

Granted, retirement planning takes time and effort. But the rewards will be worth the investment.

Don't get caught up by false predictions. Listen to these five tips that work no matter what the future may bring.

This article, written by Hope Nelson-Pope, was originally published Dec. 15, 2006. It has been updated by Dan Caplinger, who doesn't own shares of the companies mentioned. Pfizer is a Motley Fool Inside Value selection. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool's disclosure policy is building a second home on Maui.