Smaller house, lower costs: How radical downsizing can create an affordable retirement and peace of mind

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Denise Shirey is pleased with the fact that next year she will be 65 and will easily be able to live only on her Social Security benefit. She also has no plans to leave her job and enjoys working remotely from her small home office.

The reason Denise is sanguine about something most people can’t do in major metropolitan areas — live almost solely on Social Security retirement benefits — is that she’s radically downsized and lives in a home with under 400 square feet in interior living space.

It’s not that she’s lived in an ultra-compressed home most of her life. She used to live on an 11-acre horse farm with multiple dwellings. When she decided to downsize, she found homes for all but two of her horses, then donated most of her belongings.

After months of research, Shirey designed her “tiny” north-central Florida home with ample screened porches. She moved what remained of her stuff into her home in 2013. “A death purge of (most) personal stuff is essential,” Shirey says. “I got rid of nearly all of my furniture except for two recliners and a love seat. I didn’t regret any decision (to downsize) and I’m still getting rid of clothing.”

Also read: How to downsize—fast

Smaller house, lower costs

For millions of retirees, downsizing straddles the challenging area between desire and necessity. Singles or couples may not need a 2,000-square-foot-plus home. A pressing need to reduce living expenses may also be a deciding factor. A smaller living space typically means lower tax and smaller bills for utilities and maintenance.

“The most common motivators for moving to a new home include living independently and the cost and ease of maintaining the home,” according to a 2021 AARP survey.

Inadequate retirement savings may also trigger radical downsizing: Some 55% of those surveyed by Bankrate said they are “behind when it comes to retirement.”

The bottom line for most retirees and pre-retirees is the cost of living in a larger home. Nearly 70% of those surveyed by homes.com said their “primary reason for downsizing was to save money.” Note that a higher percentage of millennials and Generation Xers said that reducing their living expenses motivated them to consider downsizing.

People tour an ecological living module, a 237-square-foot ‘tiny house,’ on display in New York City in 2018.


Getty Images

For most Americans, though, unloading most of their possessions is a lot to unpack (quite literally) on an emotional level. After all, we live in a consumer-oriented society that stresses more stuff for more people 24/7.

Plus: Lessons from a real-life downsizing

Less room = less stuff

Yet with more people considering and doing “death cleaning” — dostadning in Swedish — radical downsizing to smaller living space makes eminent sense for more affordable retirements, for younger generations that won’t have to inherit or store massive piles of stuff and for the environment.

Tiny home living is one of the biggest beneficiaries of death cleaning. Smaller domiciles mean less storage space, fewer pieces of furniture and fewer reasons to own things you don’t need. It also translates into dramatically lower bills.

Shirey pays only $600 a year in real-estate tax for the small-home zoned property her house occupies. She has her own well (with a hand pump in case the power goes out) and septic tank. Her electric bill is about $65 a month. She is still deaccessioning possessions while working at home with full Internet access.

While downsizing has a variety of meanings, radical downsizing involves donating, selling or dumping most of your possessions. It’s much more than cleaning out your attic or basement, though. Done properly, it can enable you to move to a space that’s less than half the square footage of your current home.

That translates into a “tiny” or mobile home, condo or “accessory dwelling unit” that could be sited behind an existing house, perhaps one owned by children or grandchildren (if local zoning codes permit these structures).

Ryan Mitchell of Charlotte, North Carolina, radically downsized so that he could live in a 250-square-foot home. To get there, he had to donate “80% of my clothes and furniture” so that he could lower his living expenses and “spend more time with family and traveling.”

Drastic downsizing “forces your hand to make decisions,” Mitchell says. “You have to be realistic since there’s only so much you can fit in a tiny home. You have to be thoughtful. You can’t keep large furniture pieces like Grandma’s armoire.”

Related: More retirees are making the big decision to go tiny—do you have what it takes?

Tiny homes, big impact

A significant bonus in downsizing comes if your tiny house generates a much smaller ecological footprint. Smaller homes consume less energy for heating and cooling, therefore emitting less climate-changing carbon dioxide. Most are heated and cooled by “mini-split” heat pumps, which consume much less electricity than conventional heating, ventilation and air conditioning systems. Reducing your living space generally has an upside for the planet.

“In 1973 the average newly constructed U.S. home measured 1,660 square feet,” observes Maria Saxton, who is researching environmental planning for her Ph.D. at Virigina Tech. “By 2017 that average had increased to 2,631 square feet — a 63% increase. This growth has harmed the environment in many ways, including loss of green space, increased air pollution and energy consumption, and ecosystem fragmentation, which can reduce biodiversity.”

Still, relieving yourself of many, if not most, of your belongings can have a heavy emotional impact. You may have to part with countless curios that trigger memories. You don’t have to do it all at once, however. Shirey said her downsizing happened over a period of time. “You need time to mourn” the loss of your possessions, she notes.

Older Americans often downsize their home as their needs change. WSJ personal-finance reporter Veronica Dagher joins host J.R. Whalen to explain why many find downsizing doesn’t make financial sense in the current housing market. Photo: iStock

What do you really need?

Of course, a natural barrier thought comes into most Americans’ minds at this point. “Yes, all this sounds like a great idea, but how would I get rid of all my stuff?” This is a difficult exercise for many, so it’s helpful to engage in the “desert island” thought experiment.

If you were Robinson Crusoe and stranded on an island, what would you need to survive — not just physically, but mentally and spiritually? For me, I have long maintained a “desert island bookshelf” of classics that I return to and consider essential lifetime reading. The authors range from Homer to Barbara Kingsolver.

Even if you decide not to dramatically reduce your living space through relocation, downsizing still makes sense. It compels you to be more introspective on what you need and want to reduce your material and ecological footprint. It won’t be a seamless process, Mitchell adds, although it will propel you to consider “what you really need and how you want to live.”

John F. Wasik is a regular Next Avenue contributor, author of 19 books and writer of the Substack newsletter “Refinement.”

This article is reprinted by permission from NextAvenue.org, ©2024 Twin Cities Public Television, Inc. All rights reserved.

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