Downsizing in retirement: Pros, cons, and how to decide

If you’re thinking about downsizing in retirement, you’re definitely not alone. Many retirees and soon-to-be retirees face the same question: Should we move to a smaller home, or stay in the same place we’ve lived for years? A smaller place could reduce expenses and simplify daily life, but the decision deserves careful thought.

This guide covers the financial side of downsizing and helps you decide when the time may be right. You’ll also get a step-by-step plan for making the transition simple and stress-free.

‍

{{key-takeaways}}

‍

‍

Pros and cons of downsizing

Here are the pros and cons to know before making a move. This list assumes to cost of the smaller home is worth less than the current value of your current home – depending on location and the real estate market, this is not always the case.

Pros

• Increases liquid assets: Selling a larger home could free up a substantial amount of cash, which you can put into your retirement savings, travel plans, or long-term savings.
• Lower taxes/insurance: You could pay lower taxes and insurance premiums in a smaller home. This can help you keep more money for everyday expenses.
• Less upkeep: With a smaller place, there’s less to clean and maintain, meaning more free time to actually enjoy your retirement. It can also reduce the physical strain that comes with caring for a large property.
• Improved accessibility: Downsizing is a chance to move somewhere more accessible, with single-level living, wider doorways, and modern touches that make life feel comfortable and safe.

Cons

• Moving costs: Between hiring professional movers, buying packing supplies, and covering any renovations or repairs, moving can quickly become a financial burden.
• Potential capital: If your current home has appreciated significantly, selling it might trigger capital gains taxes — especially if it’s not your primary residence for tax purposes.
• Loss of space: Smaller homes mean less space for furniture, hobbies, and hosting, and that can feel like a real adjustment if you’re used to having more room.
• Emotional loss: Moving out of a longtime home isn’t easy. All the memories and connections you’ve built can make the transition emotional.

‍

When NOT to downsize

Downsizing can be a great choice for many retirees, but certain situations can make it smarter to hold off.

Poor local market

A weak market can limit buyer interest and lead to disappointing offers. If home prices in your area are low or dropping, selling now might mean leaving money on the table. Waiting for the market to improve can get you a higher return and give you more financial wiggle room for your new home. Timing the real estate market can be complicated and you should seek help from a real estate professional on a good time to sell based on market conditions.

Close to recovery from a recent health event

Recovering from surgery, illness, or another health event can take a toll. Because downsizing is physically and mentally demanding, wait until you’re feeling better before making a big change that could slow your progress.

Inadequate social support at destination

Moving somewhere without family support or community resources can lead to feeling isolated. Social connections can play an important role in your well-being. Make sure to choose a location that matches your lifestyle and daily needs.

Estate or probate complexity

Unresolved ownership, required court approvals, and disputes among heirs are all issues that could delay a home sale. When estate or probate issues tie up your home, selling can cause legal headaches. Once you resolve these matters, you can reduce complications and make the move a lot easier on you.

‍

How to downsize for retirement: Step-by-step guide

Here’s how to downsize your home for retirement so the transition is as smooth as possible.

Start early

Downsizing takes longer than most people expect. If you start early, you can sort through your belongings at your own pace and give yourself time to check out neighborhoods and compare homes. With that extra breathing room, you can carefully weigh your options and make decisions without pressure.

Define your why and non-negotiables

Before you look at properties or pack any boxes, get clear on your reasons for downsizing. You may want to reduce expenses or move closer to loved ones. When you define your why, make a short list of non-negotiables. This could be preferences like walkability, one-story living, or staying within a certain budget. Knowing your priorities helps you stay on track even when decisions pile up.

Run the numbers

Take a look at your current home equity, moving expenses, and long-term budget. This gives you an idea of what you can comfortably afford in retirement. It also helps to factor in taxes and insurance since those affect how much financial flexibility you really have.

Check healthcare and service access

Healthcare typically becomes a bigger priority with age. Look for quality hospitals, specialists, and support services close to your new home. That way, you’ll have peace of mind in case of an emergency.

Consider timing with markets and life events

Housing markets go up and down, so waiting for better conditions can increase your financial return. At the same time, health changes or reduced mobility can make downsizing more challenging than it needs to be. Planning your move around the market and your personal circumstances creates a smoother experience.

‍

Best ways to downsize for retirement

Once the timing is right, here are some of the easiest ways to downsize for retirement.

Selling your home for a smaller property

Selling your current home and buying something smaller is the most common way to downsize after retirement. It can typically free up equity, cut your monthly expenses, and give you less space to maintain. The key is finding a home that provides comfort and convenience while keeping costs in check.

Move to a retirement community or 55+ development

Developers build retirement communities with the needs of older adults in mind, offering everything from social activities to accessible design. Many communities also take care of landscaping, maintenance, and other household chores to make everyday life easier and more enjoyable. Plus, moving to a retirement community or 55+ development helps you connect with people in the same stage of life.

Rent or rent-to-own/move nearer family

Renting gives you flexibility without locking into a long-term mortgage. It’s a low-pressure way to try out a new area or lifestyle. Or it can give you a chance to move closer to family. Being near loved ones can provide companionship and peace of mind as you settle into your retirement years.

‍

Take charge of your retirement with Gainbridge

There’s no one-size-fits-all approach to downsizing. What matters most is finding a path that works for you and your retirement goals. With a thoughtful plan, you can protect your savings and create a home that fits your lifestyle.

Ready to take the next step? Visit Gainbridge to explore tools, resources, and strategies that help you plan your retirement with confidence and make the most of your downsizing journey.

‍

This article is for informational purposes only. It is not intended to provide, and should not be interpreted as, individualized investment, legal, or tax advice. For advice concerning your own situation please contact the appropriate professional. The Gainbridge® digital platform provides informational and educational resources intended only for self-directed purposes. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

‍