To Downsize or Not to Downsize?

For some retirees, a bigger home is better.

- BY ROBYN A. FRIEDMAN

As you approach retirement, you may think that downsizing to a smaller home makes a lot of sense. After all, downsizing can lower your living costs and reduce the hassle that comes with taking care of a large house. And if your kids have flown the nest, some of your bedrooms are probably gathering dust anyway.

Those are certainly compelling reasons to shift to a less-spacious house. But before you pull the trigger, give some thought to the reverse: “upsizing” to a larger home that suits your expected lifestyle in retirement. You may, for example, want a house with adequate space for entertaining friends and hosting family members when they visit, or one that has extra bedrooms for a home office, gym or hobby room.

The right choice for you depends on your budget and your vision for retirement. As you weigh your options, follow these steps.

Figure out your budget.

Your budget should be a key factor as you determine the size of the house you'll buy. “A buyer who is 55 or older has a budget because they’re going to be entering an era when they’re on a fixed income,” says Marcie DePlaza, chief operating officer of GL Homes in Sunrise, Fla., a builder of family and 55+ homes throughout Florida. That’s true even for buyers who can afford homes at higher price points, she says. “They’re always mindful of their budget and take into consideration what their monthly payment will be.”

Your monthly expenses hinge on whether you buy a home with cash or finance part of the cost with a mortgage. Many homeowners are sitting on substantial home equity. According to a report from technology and data provider Intercontinental Exchange, U.S. mortgage holders had a record $17.6 trillion in equity entering the second quarter of 2025. If you have a heap of equity in your current home, you may be able to use the proceeds from selling it to buy your next home outright or to make a sizable down payment, reducing your monthly mortgage payment.