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How Inertia Can Help You Retire with More

David Ning
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Nalcrest Hey there, Mr. (or Ms.) Postalworker. Wondering where you’re going to retire? Nalcrest, a retirement community founded in the early 1960s in south central Florida, was built exclusively for postal workers. “Before the strike of 1970, wages for letter carriers were very low; in New York City some of us were even on food assistance,” says Tom Young, who handles operations for Nalcrest. “So the idea behind Nalcrest was to create an affordable place for letter carriers to retire.” Even today, this community charges a maximum rent of just $520 per month, which includes the home, utilities other than electricity, and grounds maintenance. There are 500 one-story apartments with around 700 residents, as well as a recently renovated pool, shuffleboard and bocce ball courts, a 75-acre lake (for fishing, kayaking and boating) and a small restaurant.

8 unconventional retirement communities

One of the most effective ways to improve your finances is to adjust your plan so that automatic decisions help you to build wealth instead of spend. By establishing the path of least resistance (in other words, the default choice) as the best behavior for your finances, you will automatically be making progress toward a comfortable retirement. Here are a few ways to get started on this optimizing process:

Pay yourself first. It's a good idea to save money as soon as your paycheck hits your checking account. The danger is letting the usual reasons to spend the cash creep in once the money is in your account. And even if you can avoid the spending temptation, you are losing a little more of the compound interest effect if you wait a few days to transfer the money to a higher yield account.

Set up an automatic contribution increase for your 401(k). Many 401(k) plans allow participants to increase the portion of their pay that is contributed to the 401(k) automatically. If you aren't maximizing your retirement account contributions, this feature may help increase your 401(k) balance substantially over time. And if you can time the increase to the time of year when you usually get an annual bump in salary, you won't even have to deal with a smaller paycheck.

Try spending cash for 3 months. Convenience is so powerful that it is estimated that consumers spend 30 percent more when they use a credit card instead of cash. Many people will consider themselves the exception to this rule, but the facts don't support the sentiment. Why do you think merchants can afford to pay credit card companies who in turn offer generous cash back rewards and still rack up the profits?

By paying with cash for 3 months and comparing your usual spending with cash spending, you can see for yourself whether you actually spend more. If you don't, take the credit card back out and continue as normal. But if you see that you are spending more with the card, then you can either freeze your cards or you can use the cash spending as a baseline for your new budget. Either way, you'll have more in your pockets in the future.

Set a routine to look at your finances. Whether it's once a day, a week, or even a month, you should make it a point to set a schedule to look at your finances. It's better to keep some consistency, so aim to keep it at the same time of the day, or same day of the week. If you make tracking your finances a habit, you'll eventually think of more ways to maximize your income because you will simply be thinking about the issue at hand more often.

Consider automatic contributions. Not every investment account will let you setup automatic contributions, so seek out platforms that let you automatically deposit new contributions regularly. This not only avoids possibly forgetting to make the contribution, but it will also help you avoid the temptation to market time your investments, which is a losing strategy.

Develop a list of sensible investments. You cannot invest automatically if you don't already know what type of assets to buy, so start making a list of investments that will help you achieve financial success. Look for low-cost, simple to understand investments that will grow your wealth over time. And take as much time as you need to make solid choices because the tax consequences of switching investments can be severe for assets in taxable accounts.

The best part about automating your retirement savings is that not only are you increasing your odds of a comfortable retirement, but you'll also gain back time you can use elsewhere in your life.

David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.

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