Retirement has a funny way of turning “someday” questions into “should we do this now?” questions.
One that comes up often is: Should I downsize my home in retirement?
It sounds straightforward—sell the bigger place, buy something smaller, and enjoy lower costs. But in real life, the decision is rarely that simple. A “smaller” home doesn’t always mean “smaller” expenses, and the right move depends on what you want your retirement to look and feel like.
Below is a practical framework we use to help clients think this through—so you can make a decision that fits your lifestyle, your finances, and your long-term plans.
Start with the “Why” (Because Numbers Don’t Live in a Vacuum)
Before you run spreadsheets or browse listings, take a step back and ask:
- What problem am I trying to solve?
- What am I hoping retirement feels like in my next home?
- What would be different if I moved—or if I didn’t?
In our experience, motivations tend to fall into a few buckets:
- Lifestyle and proximity (closer to family, healthcare, activities, climate)
- Maintenance and simplicity (less house to manage, fewer “projects”)
- Financial flexibility (accessing home equity, reducing carrying costs)
- Future planning (designing a home that supports aging and care needs)
None of these motivations are “right” or “wrong.” But naming your motivation can help you evaluate options more clearly and avoid making a major move based on assumptions that don’t hold up.
Understand the Role of Home Equity—Then Decide If You Need It
For many retirees, home equity is one of the largest line items on a net worth statement.
The Federal Reserve has estimated that retirees often have substantial equity in their homes, which can create options—not obligations.
Options might include:
- Increasing liquidity for retirement spending
- Funding travel or major one-time goals
- Gift planning or charitable giving
- Keeping a larger emergency buffer
- Repositioning investments (depending on the broader plan)
A good first step is getting a realistic estimate of what you could net from selling (not just what you could sell for).
That means accounting for:
- Realtor commissions and transaction costs
- Potential repairs or updates to list the home
- Moving expenses
- Taxes and closing costs on the purchase side
Online estimates can be a starting point, but they’re broad.
A local realtor or market analysis can help narrow the range.
“Downsizing” Doesn’t Always Mean Lower Costs
A smaller home can reduce costs—sometimes. But it can also shift costs, front-load costs, or even increase them depending on where and how you move.
1) Property taxes can change dramatically
If you’re moving to a state or county with different rules, your tax picture may shift. Even within the same state, a new purchase price can reset property taxes in a meaningful way.
In other words: you might reduce square footage and still pay more annually.
2) Smaller homes can be in higher demand (and priced accordingly)
In popular areas, smaller single-story homes, condos, or “right-sized” properties can be highly competitive—sometimes competing with first-time buyers or downsizers looking for the same limited inventory.
Result: you may not see the price drop you expect.
3) The move itself has real (and sometimes underestimated) costs
Even when the math works out long-term, the transition can include:
- Moving, storage, staging, temporary housing
- New furniture or renovations to fit your needs
- HOA fees (especially in condo/maintenance-free communities)
For some households, those costs are manageable; for others, they’re a reason to move more slowly and plan intentionally.
Lifestyle Drivers Matter (Sometimes More Than the Dollars)
Many retirees who consider moving aren’t primarily chasing lower expenses, they’re chasing a better day-to-day life.
AARP has reported that a majority of older adults want to remain near people and places that matter. Often this includes family, community, and access to healthcare. If your move is fundamentally about lifestyle, it can still be a great decision, but it’s worth modeling the financial impact, so it supports your plan rather than surprises it.
Consider “Aging-in-Place” vs. Planning for Support Later
Longer life expectancies have changed retirement planning. There’s a practical side to asking:
- Will this homework for me 5, 10, or 20 years from now?
- If I needed support later, what would that look like here?
- Would stairs, maintenance, distance to care, or isolation become problems?
One option some retirees could explore is a Continuing Care Retirement Community (CCRC), which can offer independent living today and additional support services later. These communities have their own financial structures and contract terms, so the right approach is to evaluate them carefully within the larger retirement plan.
Don’t Underestimate the Emotional Side
We’ll say this plainly: it’s normal for this to feel emotional.
A home isn’t just a financial asset. It’s routines, memories, family milestones, and a sense of identity. Even when a move is logical, the process of sorting, selling, and letting go can feel heavy.
That doesn’t mean “don’t do it.” It means include the emotional cost in the decision, just like you include the financial cost.
Some people feel immediate relief after moving; others prefer a gradual transition. The best decision is the one you can live with comfortably, financially and personally.
A Simple Planning Checklist
Here’s a crisp way to organize your thinking:
- Net proceeds estimate: What might you realistically walk away with after costs?
- New monthly fixed costs: mortgage/rent (if any), property taxes, HOA, insurance, utilities
- One-time transition costs: moving, updates, furnishings, travel, temporary housing
- Quality-of-life changes: proximity to family, healthcare, hobbies, community
- Long-term fit: accessibility, support needs, maintenance demands
- Plan alignment: how (or whether) the move changes retirement cash flow, tax strategy, and estate planning goals
A financial plan can help test scenarios—not to tell you what to do, but to show you how each option may affect the bigger picture.
Make It a Values-First Decision, Supported by Financial Clarity
Downsizing can be a smart move. It can also be an expensive move that mainly changes your ZIP code.
The value is in making it intentional:
- Clear motivation
- Honest cost comparisons
- Long-term planning for lifestyle and care
- A decision that supports your broader retirement goals
If you’re considering a move, it can help to review it alongside your retirement income plan, so the decision is informed, realistic, and aligned with what matters most to you.
Connect with Moran Wealth Management® to schedule a conversation. We’ll help you model scenarios and evaluate tradeoffs so you can make an informed decision aligned with your goals. Whatever you decide, the best choice is the one that supports both your day-to-day life and your long-term plan.
Sources
- AARP — Research Insights on Livable Communities (Home & Community Preferences data)
- Consumer Financial Protection Bureau (CFPB) Resources for Older Adults
- Federal Reserve — Survey of Consumer Finances (SCF)
This material is provided for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. Moran Wealth Management, LLC, does not provide tax or legal advice; you should consult your tax and legal professionals regarding your specific situation. Any information presented is general in nature and may not apply to your circumstances.