Most people wait too long. The move gets pushed off until a health event or a loss forces it, and then it happens fast and under pressure. Doing it a year or two earlier, while you still have energy and choice, gives you room to decide on your own terms.
The math surprises people. Smaller does not automatically mean cheaper here. Townhomes and new builds often carry HOA fees, and a renovated smaller home can cost more per square foot than the one you own now. If you list before you run the real numbers, you can end up moving into a payment you did not plan for.
Then there is the order question. Sell first or buy first. That call hinges on how much of your next purchase leans on the equity in the home you are selling. When it leans on it heavily, most people sell first so they know the real number they have to work with. Get that order wrong and two closings can collide.
And the house is full of decades of belongings. People treat decluttering as step one and stall out in a single room. It is not step one. Knowing your equity and your budget is. Once you see what the move gives you to work with, the sorting gets easier.