10 Savvy Money Moves Baby Boomers Are Making in Retirement

When it comes to baby boomers in retirement and their finances, we often hear about what they’re doing wrong. They’re overpaying for medical care; they’re investing in dubious timeshares; they’re embarking on pricey home renovation projects.

Read More: 7 Frugal Habits That Rarely Pay Off for Boomers in Retirement
See: 3 Ways To Recession-Proof Your Retirement

But what about all the things that this generation is doing right? As it turns out, baby boomers are making quite a few good money moves in their retirement. Let’s find out what they’re up to.   


Many baby boomers are opting for smaller homes, often in more affordable areas — a very savvy maneuver.

“This can be a smart move because it reduces their monthly housing expenses, including mortgage payments, property taxes, utilities and maintenance costs,” said Percy Grunwald, co-founder of Compare Banks. “By reducing their housing costs, baby boomers can free up more money for other expenses, such as healthcare, travel, hobbies and other interests.

“Additionally, downsizing can help baby boomers build up their retirement savings by selling their larger homes and investing the proceeds.”

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Delaying Social Security

Though there is a list of good reasons to take Social Security as soon as possible, there’s a clear benefit to delaying receiving these benefits. 

“Delaying taking Social Security benefits until age 70 can result in significantly higher monthly payments,” Grunwald said. “For every year that a baby boomer delays taking Social Security benefits after reaching the age of 62, the monthly benefit amount increases by about 8%. This can be a smart move for baby boomers who can afford to delay taking Social Security because it can provide a more comfortable retirement income.

“Delaying Social Security benefits can also help baby boomers maximize their benefits over their lifetimes, which can be especially beneficial for those who expect to live longer.”

Establishing a Home Business 

Some boomers are launching home businesses to supplement their retirement income.

“This can be smart because it allows them to continue to be productive and use the skills they’ve acquired throughout their career,” said Sarah Connelly, a finance expert at Cashfloat. “Home businesses also offer the flexibility to work on their own schedule and are often less expensive to start and maintain than a traditional business.”

Investing in Real Estate

Investing in real estate is smart for anyone, because it provides income and also is well-hedged against inflation. But it’s especially great for boomers, who can use their investments to augment their earnings.  

“Investing in real estate can be a great way for baby boomers to generate a steady stream of income during retirement,” said Michael Collins, CFA of Endicott College and CEO of WinCap Financial. “Real estate investments can provide regular income, and the value of the investments can appreciate over time.”

Utilizing Reverse Mortgages

Reverse mortgages can be savvy maneuvers for boomer homeowners. 

“These mortgages allow older homeowners to convert their home equity into cash, which can be used to supplement their retirement income,” Connelly said. “Reverse mortgages can also provide cash to pay off existing debt, pay for home repairs or cover medical expenses.”

Moving Cash to a Money Market Account or CD 

One move boomers are frequently making that folks of all ages should take note of is moving idle cash to money market accounts and CDs. 

“A move several of my clients have made over the last year has been to transfer their cash from an account where it is sitting idle to a money market account, which typically pays significantly more and is nearly as liquid,” said Jim Eutsler, CFP, ChFC, CMA, wealth advisor and partner at HCM Wealth Advisors.

“In one instance, a client had $100,000 at a local bank paying approximately 0.2% interest on it. They transferred it to a money market account paying 4.5%, which equates to increased interest income of nearly $4,300 per year. A money market is not FDIC insured; however, CDs often are and they too offer very attractive returns right now.” 

Executing Roth Conversions 

Another smart move Eutsler sees his boomer clients making is executing Roth conversions. 

“This is a tax planning technique that is designed to move money out of their traditional IRA in which future gains will be fully taxable and into a Roth IRA in which future gains will be tax free,” Eutsler said. “This also removes money from an environment (traditional IRA) where they will have required distributions into one (Roth IRA) that does not require those.”

Tapping HSA Accounts 

If ever you needed more inspiration to create a Health Savings Account (HSA) with your place of employment, here it is. HSAs are really paying off for boomers. 

“Retirees are using Health Savings Accounts to pay medical expenses, including Medicare premiums, rather than taking money out of taxable accounts,” said Bruce Tannahill, a director of estate and business planning with MassMutual. “Distributions from HSAs to pay qualifying medical expenses are tax free, even though the contributions were tax deductible.”

Investing Some Money in Stocks 

Everyone should have a diversified portfolio that doesn’t just include stocks. But having some stocks in the portfolio is crucial. Boomers are working this strategy to success. 

“Finder’s data shows that over half (55%) of Boomers invest in stocks outside of a retirement plan,” said Laura Adams, MBA, a personal finance expert with Finder.com. “With approximately $209,589 invested, they own more stocks than any other generation. Due to potential market risk, retirees shouldn’t keep their entire portfolio in stocks. However, allocating enough to stocks is essential to ensure your nest egg continues to grow throughout a retirement that could last 30 years or longer.”

Gifting Strategies and Wealth Transfer 

Another way boomers are excelling in (or near) retirement is by utilizing various gifting strategies, “such as annual exclusion gifts or funding 529 plans, to transfer wealth to their children or grandchildren in a tax-efficient manner, helping to secure their family’s financial future while minimizing estate tax implications,” said Jack Prenter, CEO of Dollarwise

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This article originally appeared on GOBankingRates.com: 10 Savvy Money Moves Baby Boomers Are Making in Retirement

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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