The Real Secret to Retiring Well

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You've probably heard all about The Secret by now. This movie (and book) insists that one can find success in anything by feeling that success inside.

Once you've got the feeling going, says The Secret, the mysterious "Law of Attraction," which is said to work via vaguely referenced principles of quantum physics, attracts all the success you'd ever want out here in the material world.

Clearly I'm a little skeptical. Magical thinking alone won't guarantee a secure retirement -- but there are folks out there who feeeeeeel future wealth and think they can forego their IRA contributions because the universe is on the case.

That probably won't work out well.

At the same time, there are lots of people who put The Secret to work and say they saw real gains in life -- huge positive changes, in some cases. I think there might be something to it -- but I don't think it's magic, or even quantum physics.

I think it's something we can use to build great retirement funds ... if we see it for what it really is.

How it really works
I've spent a big chunk of my adult life working on ways to motivate people to save more for retirement. It's a tough task, but it's a necessary one -- in any given company, on average, only about five-eighths of those eligible are investing in the 401(k) plan, according to Fidelity Investments.

What holds the other 37% or so back? Surveys find lots of reasons, but very few of them hold water. Occasionally, there are some good motivations -- those who stop contributing temporarily to pay down debt, or save for a down payment for a house, or to help make ends meet after a spouse loses a job -- but by and large, the reasons given resemble these:

• The stock market scares me.
• I put it off for too long, and now it's too late.
• I live month-to-month and don't feel like I can change my spending habits.

See what I mean? There's no hard analysis there. These reasons are arguably all about mind-set, a factor that plays a big role in people's often-tortured relationship to money.

According to Stanford researcher Carol Dweck, people approach any given situation with either a fixed or a growth mind-set. Simply put, a fixed mind-set leads one to shy away from challenges and toward feelings of powerlessness. A growth mind-set sees challenges as growth opportunities, leading to feelings of confidence that one can learn new skills and overcome setbacks

The reasons given above all seem like classic fixed-mind-set thinking to me.

The secret of The Secret
The Secret tells us that if we feel, deep down in our hearts, that something will come to pass, then it will -- because the universe will make it happen. Shifting from a feeling of powerlessness to a feeling that opportunities are appearing could well spark a shift in mind-set -- from fixed to growth, from resistance to comfort with taking action.

The feeling alone isn't enough. But if the exercise in feeling leads one to see opportunities and take action -- and keep taking action, even in the face of setbacks -- then many things do become possible.

Like retiring with a really nice nest egg.

Putting this secret to work
Obviously, The Secret -- much less a change in our own mind-sets -- isn't going to move the market. It's not going to unload Toll Brothers' (NYSE: TOL) inventory, or save Ambac (NYSE: ABK) from claims on the subprime-mortgage bonds it insured, or develop a new line of cars for Ford (NYSE: F). (That said, Ford CEO Alan Mulally is a great example of a growth-mind-set executive, in the tradition of General Electric's (NYSE: GE) Jack Welch, and he might yet turn that company around.)

But with the right mind-set, we can start to see possibilities and act on them. We can look through roughed-up sectors for stocks that might shine -- maybe Johnson Controls (NYSE: JCI) in autos, LoopNet (Nasdaq: LOOP) in commercial real estate, or Goldman Sachs (NYSE: GS) in banks -- and make sensibly sized investments, knowing that not all our ideas will work out and being OK with that. We'll learn from our mistakes and become better investors.

Most of all, we'll get moving. We'll understand the real secret of wealth -- spending less than we earn -- and see that the 401(k) is one of the best saving tools ever devised. We'll take action to learn more about investing for retirement -- maybe with a stack of books from the library, maybe by taking a free trial of the Fool's Rule Your Retirement newsletter -- and set up our portfolio for maximum return with minimum fuss.

And eventually we'll reap the fruits of a well-funded retirement, with no magic necessary.