Most people have a flaw in their retirement mentality. This flaw is like a bug in a computer that can mess up the operating software or keep it from running. If you don’t correct the flaw, you could be in for trouble in your retirement. 

The way we think about retirement is flawed. How? 

When you start saving for your retirement (hopefully in your teenage years or 20s — if you haven’t started yet, start now!), it can feel like standing at the base of Mount Everest. It feels like an impossible climb. You know you’ve got to get to the top, but from the bottom it just feels like it could never happen or at least that it will take forever. 

That’s one reason many Americans put off saving for retirement. The money they could put into savings could easily go toward more immediate things, like cars, or a mortgage, taxes, food, childcare, diapers — you name it! 

“Besides,” you might ask yourself, “how much is this $100 a month really going to make a difference once I hit retirement?” 

There’s the flaw. 

The flaw is we can’t see the value in actually putting money into our retirement accounts now.  

Stats tell us about half of Americans put money into their retirement accounts. The median average in those accounts is only about $60,000. That’s a drop in the bucket for what most people need in retirement. But people can’t see why they should save for retirement when they have so many other things to pay for. 

But if we could see the future, we would be able to see what would happen once that invested money starts compounding over a long period of time. That would be like realizing there’s an air lift that will take you up a good portion of the climb up Mount Everest (if only!). If we realized that, we would be more motivated. We would realize there’s a “shortcut” to saving everything we need for retirement.  

Compound interest is one of the most powerful investments, and you can take hold of it by simply putting more money into your account. But the flaw of our retirement mindset is on the front end. It’s hard to envision that compounded money now, isn’t it? If you’re looking at $60,000 in your account, you might be thinking you could take that money out and use it now for something you really need. You just can’t see what’s going to happen to your 401(k) or IRA over a long period of time. 

Because of that, the government passed a law on December 20, 2019. It’s called the SECURE Act, and it’s trying to help employers and employees contribute money to their accounts. They’re hoping that in the long run, the mentality will be change from spend, spend, spend to contribute, contribute, contribute. That way, those accounts will be able to grow into large nest eggs, and when you get to retirement, you’ll have the money necessary to do what you want to do. 

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