This paper discusses the design and the internal device physics of novel high-performance vertical-cavity surfaceemitting lasers (VCSELs) emitting at 1.32 µm wavelength. Our VCSEL design features intra-cavity ring contacts, strain-compensated AlGaInAs quantum wells, and an AlInAs/InP tunnel junction. The tunnel junction is laterally confined forming an aperture for current injection and wave guiding. Undoped AlGaAs/GaAs mirrors are bonded on both sides to the InP-based active region. These devices have recently demonstrated continuous-wave (CW) lasing at stage temperatures up to 134 O C, the highest temperature reported thus far for any long-wavelength VCSEL. In order to increase the single mode output power at high temperatures, we simulate, analyze, and optimize our VCSEL using advanced numerical software tools. The two-dimensional model self-consistently combines electrical, optical, thermal and gain calculations. It gives good agreement with measurements after careful calibration of material parameters. Design optimization promises single mode output power of 2mW in CW operation at 80 O C ambient temperature.