5 Ways Boomers Get Rich in Retirement

Planning for retirement involves not only saving enough money before you reach that stage, but also knowing what you should do with your money after you've retired.

Many baby boomers are well into retirement, and more are on their way, so how can a large group of retirees continue generating wealth as they age? Here are a few suggestions.

1. They downsize

Depending on your situation, selling your home in retirement and downsizing to a smaller home could be a wise financial decision. That's because proceeds from the sale of a house may not be subject to capital gains taxes.

If you used the home as your primary residence for two of the past five years, you may be able to sell it and keep up to $250,000 of the profit (if you're single) or up to $500,000 (if married, filing taxes jointly).

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If you move into a smaller home or to a cheaper part of the country, you may be able to pocket that extra cash without paying capital gains tax, boosting your nest egg.

2. They continue investing

Some baby boomers generate wealth well into retirement because they continue to invest in the stock market.

While the long-term average annual historical rate of return of the S&P 500 is 10.2%, retirees should adjust their portfolio allocation as they get older to avoid taking on too much risk. Investment bank Schwab recommends the following allocations:

• Age 60-69: 60% stocks, 35% bonds, 5% cash/cash investments
• Age 70-79: 50% bonds, 40% stocks, 10% cash/cash investments
• Age 80 and older: 50% bonds, 20% stocks, 30% cash/cash investments

3. Most don't have credit card debt

Recent Federal Reserve data shows that only 34% of boomers aged 65 to 74 had credit card debt. And older boomers are even better off -- just 29.8% of people 75 and older have this kind of debt.

Eliminating credit card debt won't make you rich, but with credit card rates averaging 22.6% right now, it can help you hold onto the money you've already saved.

4. They're efficient with their taxes

Part of building wealth is knowing how to hold onto your money. Many boomers have learned how to work with tax professionals to keep the maximum amount of their nest egg.

While everyone's financial situation varies, retirement experts recommend letting your tax-advantaged accounts -- like an IRA, Roth IRA, and 401(k) -- grow in retirement. When you do take withdrawals, make sure the amount doesn't bump you up to a higher tax bracket.

If you need help finding a tax professional, you can use a tool on the IRS website to help you find an accredited one.

5. They work part-time

Not everyone wants a retirement filled with tee times and cruises. Some retirees choose to work part-time to earn additional income and for the social and mental health benefits of working around others.

Nearly 25% of retirees work part-time in retirement, which could significantly boost wealth for some. For example, more than half of retirees don't have a mortgage, which means they may be able to invest money they would have spent on this bill every month.

I recently talked to some retirees who work part-time and put a significant amount of their income into brokerage and savings accounts, allowing them to expand their nest egg before they fully retire.

Retirement looks different for everyone, but it's possible to continue saving money and building wealth as you age. Use a few of the suggestions above and you could continue to expand your nest egg -- even as you enter your non-working years.