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9 Times It Doesn't Make Sense to Downsize in Retirement

Downsizing can sound like a smart financial move, but for many retirees, staying put may be the wiser choice.

By Kristin Hitchcock

Edited by Amanda Machado

Updated Nov. 25, 2025

At first glance, trading down your house in retirement might look like a savvy play. The kids are grown, the house feels big, and cutting expenses sounds appealing. Selling your home and moving into something smaller seems like a smart financial move.

However, sometimes, the best move in retirement is simply staying put, and knowing when to do that can help you avoid wasting your retirement savings.

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You live in a low cost of living town

If you're already settled in a town where everyday costs (housing, utilities, taxes, services) are modest, then selling a larger home and buying a smaller one might bring only marginal savings. The appeal of downsizing often comes from moving to a lower-cost area or reducing payments.

If your current locale already offers low housing and tax burdens, the benefit of downsizing shrinks, and the cost (moving, closing, emotional) may outweigh the upside.

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Your home is already paid off

Owning your home free and clear puts you in a strong position. Without a mortgage, your housing cost is largely limited to taxes, insurance, upkeep, and utilities. Many downsizing arguments assume you'll reduce a mortgage or eliminate it.

But if that component is gone, the savings from downsizing can be modest, and you still face transaction costs, moving hassle, and the potential to give up features you like for little return.

You host family or frequently need space

If your adult children, grandchildren or extended family visit often, maybe staying overnight or using guest rooms, a larger house may truly serve your lifestyle. One of the risks of downsizing is losing flexibility for guests, storage, or multi-generation living.

In that case, trading space for a smaller footprint may create friction and regret rather than cost savings.

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Your taxes and overall costs are already low

If your state income tax is minimal, your property tax is modest, and you're not burdened by high maintenance or utilities, then the "downsizing lowers costs" case weakens. Articles warn that sometimes property taxes in a new area or the cost of moving can offset or exceed the anticipated savings.

You'll want to run the full numbers, including moving costs, closing costs, legal fees, to see if the deal is meaningful.

You live in a one-story home with minimal maintenance

If your current home is already single-level, built with accessibility in mind, and you're comfortable with upkeep, then one of the strongest downsizing arguments (reducing maintenance, stairs, yard work) is less compelling. Downsizing often makes sense when the home is too large or has too much yard for current needs.

If you already have much of what you want (single story, manageable yard, reliable systems), you might be better off staying where you are and reallocating your resources elsewhere.

You're emotionally connected and settled in

Homes aren't just assets. They're memory-boxes, community hubs, and emotional anchors. The emotional cost, dislocation from friends/neighborhood, loss of identity, and adjustment to smaller space are real drawbacks.

If you feel at home, connected to your community, comfortable where you are, the non-financial costs of moving might outweigh the financial gains.

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You'd lose a favorable mortgage or interest rate

If you refinanced during the historically low-interest-rate years, selling your home could mean giving up that advantage. Buying another property today likely comes with a higher rate, even for a smaller house. That means your monthly payment could actually increase, not decrease.

Unless you're downsizing dramatically or paying all cash, losing a low-rate mortgage can erase much of the potential savings.

You'd pay more in HOA fees

Many retirees are surprised to find that smaller homes or condos often carry higher HOA fees than larger, standalone houses. These fees might cover maintenance, landscaping, or amenities, but they can easily exceed any savings from a smaller footprint.

Always compare total monthly costs, not just home prices. Sometimes, the "cheap" condo costs more per month than the house you already own.

You'd face steep moving and transaction costs

Even if you make money on the sale, the act of selling, buying, and moving can quickly add up. Realtor commissions, repairs, staging, inspections, closing costs, and movers can easily eat into your equity.

According to Zillow, sellers often spend more than $20,000 preparing and closing on a home sale. That's before counting the emotional and physical toll of packing up a lifetime's worth of belongings.

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Bottom line

Downsizing can seem like the "responsible" next step in retirement, but it doesn't always lead to the financial relief or simplicity people expect. If your home is already affordable, practical, and part of a community that supports your lifestyle, moving may do more harm than good.

According to Freddie Mac, many older homeowners are choosing to age in place rather than downsize, often because the financial benefits just don't add up once fees, taxes, and moving costs are included. Staying put can be a smart part of your long-term retirement plan, especially if your current home already fits your needs and budget. Before making a move, take time to run the numbers and weigh the lifestyle trade-offs to be sure it truly supports your goals.

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