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What are the pros and cons of downsizing for retirement?

The kids have flown the nest. Yard work, snow clearing, and home maintenance are becoming chores. And you have guest bedrooms that rarely see guests. Is it time to consider downsizing?

Couple packing boxes.

As you’re getting closer to retirement, you may be considering downsizing. This might be a tempting thought—less space to clean and maintain. And, if you can free up equity from the family home, there may be more money for retirement. So, what’s not to like?

While the appeal of a smaller house to clean and that extra cash in your pocket can be high, the process can be long and stressful. Take your time. Don’t rush the decision. Ask family and friends who’ve been there, done that. And look carefully at all the potential pros and cons of downsizing, including the ones listed below.

Thinking about downsizing?

Pros

Cons

Less space to clean and maintain could mean more free time

Goodbye to the family home and many memory-rich belongings

Selling and buying at the right price may provide more money for retirement

Real estate commissions, legal/closing fees, and moving costs can add up

Considering a condo?

Pros

Cons

Simple, modern living, with new friends and a built-in social life. Some condos also offer:

  • Security
  • A gym and pool
  • A party room
  • Organized activities
  • Indoor parking

Monthly maintenance fees and unforeseen assessments (roof, windows, or other repairs)

Thinking of a smaller house?

Pros

Cons
  • Keep a yard and garden
  • Stay in your neighborhood or move closer to town
  • Sell your cars and take public transit

Some maintenance still required

Additional considerations and tips for downsizing, no matter your decision

  • Start decluttering now, to help make your move easier.
  • Keep in mind that closing fees, real estate commissions, fix-up costs, and moving expenses can gobble up some of your profit.
  • Spend time with a calculator, and be realistic about the numbers.
  • Ask an independent advisor to weigh in.
  • Be open to both resale and new properties to help find a unit within your budget if you’re considering a condo.
  • Try renting first if you’re considering a smaller town, lakeside cottage, or something far from your current home for a few months or longer to get a sense of the seasons, the people and surroundings, how far you might be from things you really love, and other important lifestyle factors.
  • Think through all your options, including renting versus buying. You may be able to invest the proceeds from your home sale and use the interest income toward rent. 

The content of this document is for general information only and is believed to be accurate and reliable as of the posting date but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.

MGTS-P 546203-GE 10/25  546203           MGR0926254848845

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