Retirement Retired Life

12 Reasons It Can Be a Bad Idea To Downsize in Retirement

Downsizing and living in an RV sounds fun, but it’s not for everyone.

woman holding miniature house sculpture property concept
Updated Nov. 3, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Conventional wisdom often suggests downsizing your home as you prepare for retirement. This advice is most often directed at couples who, after the children have left the nest, find themselves living in a large house with empty bedrooms.

For as much as some people love downsizing into a condo or even an RV, it’s not right for everyone, and that’s okay. Here are 12 valid reasons for staying in your home as you age.

Find Medicare plans with low or $0/month premium
Compare Medicare Advantage plans side-by-side to find what’s right for you
— Select a state below —

Your home may be worth less than you think

fizkes/Adobe senior couple consulting insurance agent at office

With the mortgage paid off and years spent in your home, you might be tempted to think your property will fetch a small fortune. Maybe some neighbors got a great offer, too.

The housing market is anything but static, though, so it’s within the realm of possibility you’ll net less on your home sale than you think.

You may have to pay taxes on your home sale

JJ Gouin/Adobe capital gains and losses form with pen

Couples are exempt from taxes on the first $500,000 of profit of a home sale and singles $250,000. But if you make more than that, that’s when the IRS comes knocking.

How long you’ve lived in a place is also a factor when accounting for taxes, so read the fine print.

There are closing costs to consider

Wasan/Adobe realtor showing quote on calculator to client

In addition to potential taxes, there are closing costs that everyone has to pay when selling a property. These include fees for attorneys, appraisals, inspections, and more.

You also have to pay your realtor’s commission, which can be quite substantial, especially if your home sells at a high price.

Earn $200 cash rewards bonus with this incredible card

There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.

The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.

This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 19.74%, 24.74%, or 29.74% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.

The best part? There's no annual fee.

Click here to apply now.

Your retirement destination may be expensive

nadezhda1906/Adobe happy senior woman at tropical beach

Many retirees dream of escaping chilly Northern or Midwest locals and moving to sunny Florida or elsewhere in the Sunbelt. Maybe you’ve even had your eye on The Villages for decades.

Housing throughout the Sunbelt has gotten much more expensive in recent years, however, which may make a move to the area cost-prohibitive.

You may need to pay for storage

sframe/Adobe Mini Self Storage Rental Units

Just because you downsize doesn’t mean you let go of all of your possessions, especially if you’re the sentimental type. That means you’re going to pick up a storage payment every month.

The more storage you use, the more you’ll pay, especially if you have large items that need climate control.

Moving is expensive (and exhausting)

peopleimages.com/Adobe couple checking moving boxes at new home

We’ve all moved at some point in our lives, which means we all know how expensive and exhausting it is. The more stuff you have, the more of both it will be, too.

It’s likely more expensive than you remember, especially if you’ve lived in one place for decades. Then you have to start all over in a new place on top of everything else.

You could make money renting out space

pikselstock/Adobe Young female backpacker renting apartment

If you have a knack for hosting and enjoy meeting new people, you can rent out some of those empty bedrooms on a short-term rental site. It’s a great way to supplement your income.

Or if you’re less social, you can convert part of your home into a separate unattached space to rent out, such as a backyard cottage.

You may miss all of that extra space

InsideCreativeHouse/Adobe senior couple enjoying vacation on camper van

On the flip side, maybe you’ve been able to spread out in your home and make use of those extra rooms. Perhaps you have an art studio, an office, or an exercise room to enjoy.

Downsizing means having less space — often a lot less. That’s something you might miss, especially in an RV.

You may need intergenerational living space

imtmphoto/Adobe happy asian daughter hugging father at home

The cost of housing is higher than ever, which has a lot of young people moving back in with their parents. Even when they do everything “right,” it’s exceedingly common.

Or you may have aging relatives who need to move in with you. In either case, you’ll be glad you didn’t downsize when they become your roommates.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

How to become a member today:

  • Go here, select your free gift, and click “Join Today” 
  • Create your account (important!) by answering a few simple questions 
  • Start enjoying your discounts and perks!

You’ll also get insider info on social security, job listings, caregiving, and retirement planning. And you’ll get access to AARP’s Fraud Watch Network to help you protect your money, as well as tools to help you plan for retirement.

Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.

Become an AARP member now

Your home may already be ADA-compliant

amazing studio/Adobe senior woman using security handle at hospital

If you’ve already modified your home to accommodate people with mobility issues, it can be a good idea to age in place. Many people need such accommodations as they get older.

If you haven’t made these additions to your home, it’s easier to make such renovations in a large house than it is a condo or an RV.

You don't want to give up your lawn or garden

Impact Photography/Adobe senior friends playing golf at backyard lawn

Downsizing doesn’t just mean giving up indoor space, you also likely sacrifice that large lawn or elaborate garden you’ve tended for years.

This is also something to consider if you have dogs or other pets that enjoy having lots of land to run around on.

You simply love where you live

Carlo/Adobe senior couple spending time on hammock outdoors

If you’re happy where you are, stay where you are. Maybe that means you have friends and family nearby or you have doctors you trust and a network of support established.

Perhaps you just love your house and have many happy memories there, so why would you leave? The good news is that you don’t have to.

Bottom line

InsideCreativeHouse/Adobe senior couple walking dog outside camper van

We all want to avoid wasting money in retirement. To that end, if you don’t want to downsize, don’t. There are plenty of reasons not to.

Retirement isn’t a one-size-fits-all time in our lives, as different people want different things. So if you want to make that cross-country trip in an RV, go for it. If you want to stay nearby to watch the grandkids, do it. It’s all up to you.

Lucrative, Flat-Rate Cash Rewards

5.0
info

Wells Fargo Active Cash® Card

Current Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

$0

Rewards Rate

Earn unlimited 2% cash rewards on purchases

Benefits and Drawbacks
Card Details


Author Details

Cat Lafuente

Cat Lafuente is a Florida-based writer and editor with extensive experience in digital and print content spaces. Her own personal finance journey — particularly consolidating debt and paying it off, in turn boosting her credit score and becoming a homeowner — inspired her to join the FinanceBuzz team; she hopes she can help others do the same.