An empty nest, retirement, or a new commitment to minimalist living can prompt a decision to downsize. People drawn to smaller homes may like that they’re easier to clean or maintain, often with less yardwork involved. Downsizing can be a hugely positive change for people seeking a different lifestyle, but it does invite some important considerations. Here are some things to factor in when taking the leap.


How much space a family needs is subjective, but it often requires talking things through and compromise, especially when downsizing is a goal. Families of three or four can sometimes make it work in a tiny house, but even a two-bedroom apartment may feel small to a couple who spent years in a sprawling single-family home.

Ultimately, it’s important for homeowners and their families to be realistic about how much space they need and pick a home that suits their needs. Living in close quarters may not suit everyone, especially larger families and those with teens and young adults (who tend to value privacy). It’s important to get input from everyone in the family before deciding on a house.


The financial benefits of downsizing can make it a great option for families looking to cut back on expenses. That said, downsizing may come with its own set of costs. Will the new house need new furniture to suit its size and style? What will packing and moving costs be like? Does the home need any repairs before moving day? Look into financing options, especially if the house requires new appliances or furniture. A credit card might work for smaller, short-term expenses. For bigger expenses, consider options like getting a personal loan or borrowing against cash value of a permanent life insurance policy, such as whole life insurance or universal life insurance.


Homeowners will need to consider which belongings will make it to the new, smaller home. Identifying the essentials may be tricky—parting with perfectly good items usually is, and it may take some time for homeowners to accurately assess what they use on a regular basis—so it’s important to start the process early and give it some time. Figure out what to throw away, donate, or sell. Keep in mind that a smaller house may also have less room for large light fixtures, decorative items, and furniture, and it may be necessary to sell or donate these items as well.

Special considerations

Each homeowner’s needs and priorities are unique. If relatives drop in often for short stays, it may make sense to prioritize a guest room or finished basement even in a smaller home. Someone who works from home may require a separate office or quiet area. Downsizing doesn’t have to mean giving up on these requirements; a home should accommodate the needs and lifestyles of its residents. Homeowners should come up with a list of must-haves and nice-to-haves for their new property. Convey any special requirements to the realtor and highlight how important they are to the family.

The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value will reduce the death benefit and may affect other aspects of the policy.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries in Milwaukee, WI.

Source: Northwestern Mutual