4 Reasons Boomers Can’t Afford To Downsize and 5 Ways To Fix That
Written by
Cindy Lamothe
Edited by
Rebekah Evans
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Downsizing sounds great in theory: less space to clean, lower bills and maybe even some extra money in the bank. But for many boomers, the reality is a bit more complicated. The housing market isn’t what it used to be and trading in the family home for something smaller doesn’t always add up.
According to NPR, some baby boomers say they want to downsize, but it just doesn’t make sense financially — here’s a breakdown of what’s going on and how they can fix it.
Huge Gap Between Current Home Value and Smaller Properties
Andrew Lokenauth, money expert and owner of BeFluentInFinance has worked with hundreds of boomers trying to downsize and the biggest obstacle he keeps seeing is the crazy gap between their current home’s value and smaller properties in desirable areas.
“The market’s gotten so out of whack that even tiny condos in nice neighborhoods cost almost as much as their paid-off family homes — it just doesn’t make financial sense for many of them,” he said.
And he’s not wrong. By the time boomers factor in moving costs, taxes, upgrades to make the new place livable and maybe even a bidding war or two, the numbers often just don’t work out. In some cases, they’d be spending just as much — or more — to live in a smaller space with higher HOA fees and fewer perks.
Moving Is Emotional
Then there’s the emotional stuff, according to Lokenauth, which hits harder than most people realize.
“Last month I helped my mom try to sort through 40 plus years of memories in her house. She broke down crying over old holiday decorations and my dad’s workbench,” Lokenauth explained.
He noted that the thought of parting with belongings that hold so much meaning can be straight-up paralyzing. It’s not just about packing boxes — it’s about packing up a lifetime.
Every corner of the house holds a story: the growth chart marked on the doorframe, the kitchen where decades of holiday dinners happened, the closet full of kids’ artwork and photo albums. Letting go of that isn’t just difficult — it can feel impossible for folks.
Lack of Suitable Housing Options
Another huge issue Lokenauth noticed is the lack of suitable housing options. He said folks want single-story homes (stairs are getting harder) in walkable areas near amenities — but that specific combo is super rare and expensive.
Many of the smaller homes on the market either need a total facelift — think outdated kitchens, cramped bathrooms and zero accessibility features — or they’re tucked away in car-dependent suburbs, far from the things that make day-to-day life easier and more enjoyable.
And when a place does check all the boxes? Lokenauth said it usually comes with a hefty price tag or gets snatched up fast by younger buyers or investors.
High Property Taxes and Insurance Costs
Property taxes and insurance costs throw another wrench in the works. “I’ve seen cases where downsizing to a newer, smaller place actually increased these expenses,” Lokenauth said.
One of his clients found her taxes would jump $4,000 annually by moving to a condo half the size of her current home.
Home insurance can be just as tricky. Older homes might be cheaper to insure because they’ve been grandfathered into lower rates, while brand-new builds or condos in pricier areas can come with steeper premiums — especially in places prone to storms, fires or earthquakes.
So even when boomers find a smaller place that fits their lifestyle, the monthly costs don’t always go down. In some cases, they actually go up, making the whole downsizing dream feel like more of a financial trap than a smart move.
How To Overcome These Downsizing Challenges
Start With a Realistic Budget
“From my experience helping boomers navigate this transition, starting with a realistic budget is crucial,” Lokenauth said. “I tell my clients to factor in all the hidden costs — moving expenses, new furniture, repairs, etcetera.”
He said getting a clear financial picture helps avoid nasty surprises.
Start Decluttering Early On
According to Lokenauth, the decluttering process needs to start way earlier than most people think.
He’s developed a system where he tackles one room per month, sorting items into keep, sell, donate and trash.
This gradual approach, he explained, is way less overwhelming than trying to do it all at once. And scheduling regular donation pickups creates deadlines that keep the momentum going.
Do a Test Run in a Smaller Space
Something that’s worked really well with Lokenauth’s clients involves doing a test run in a smaller space.
“I encourage them to close off rooms in their current home for a few months, living only in the square footage they’re considering for downsizing,” he explained.
He said this helps identify what space they truly need versus want.
Location Flexibility Can Make a Huge Difference
Lokenauth has found that looking just 15 to 20 minutes outside prime areas often reveals way better options at lower price points. And many of these slightly removed locations are developing the walkable amenities boomers want.
Treat Downsizing as a 2 to 3 Year Project
The smartest approach Lokenauth has personally seen is treating downsizing as a two to three year project rather than a rushed transition.
This gives time to research areas, declutter methodically and make strategic improvements to the current home that’ll maximize its sale value — all while waiting for the right smaller property to come along.
Remember, there’s no perfect solution that works for everyone. Lokenauth said he’s found that combining these different approaches — based on each person’s specific situation — usually helps create a workable path forward. The key is starting the planning process early enough to have options.
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