Great! You're considering that there is more to life than a bunch of square footage, stairs you may not need and baseboards that won't clean themselves. That's the first step.
The next thought would be how much space do you need? This becomes the toughest part for many. If we are only in need of space for yourself, spouse and the odd visiting family member, then you would be surprised how little space you need to live comfortably.
The problem becomes when you try to take all your possessions (mostly furniture) from a 2800 square foot (plus basement) house and try to cram it into a 1200 square foot condominium. Family heirlooms tend to be the biggest stumbling block for downsizers. Many parents hope is that the kids would want these heirlooms, and hopefully they do, but more often than not, with today's style, many if not all of these heirlooms do not work with their décor. But you can't just sell it... can you? Or that mahogany dining set that you spend thousands on, no matter how many leafs you take out of the table, will not fit.*
Are you planning to buy a home for your old stuff? I would suggest you embrace the fact that you are starting a nice new clean chapter of your life, and plan to buy stuff for your new home. If the full dining set actually fits (the hutch won't fit) then that's a huge bonus. It's a new life, it's a new simple beginning, where less is more. More freedom, more time, and when done correctly, its more money too!!
I will assume that your mortgage is mostly paid off, if not fully, so I have an interesting angle for you. Contact your bank, because they would love to hear from you, and ask them approximately how much money you could pull out, secured against its value (and for what cost). You'd be quite surprised how much they would love to give someone with an exemplary credit score like your own. Then with that number in mind, or even far less, start shopping for that next possible lifestyle.
Focus on a layout and location that would best for your next chapter of life, and if you really want to live a carefree happy life and can afford it, definitely look at rentals too (there are some nice ones out there, you just have to pay – Ideally get into one in an apartment building, that way, you'll only be leaving under your own terms).
Assuming you find some places for sale, that have a layout that would work for you and leaves a little breathing room in the budget then consider buying it. This doesn't even mean that you need to start packing either, take your time, feel free to rent out that property. All you need to do is cover the interest, taxes, and condo fees (if applicable), and you will most likely be paying down some of that equity too, while also having a solid chance of the Real Estate market naturally increasing the property's worth, while you get your affairs in order at your current home.
Then, whenever you feel the time is right to make the move, you will have your ideal property ready and waiting for you, and all you'll have to do is give the tenants 60 days notice (ideally a little more because you're a gracious person) and you'll be able to move right in. But holding that thought, depending on how well you do on the sale of your home, or as budget permits, you could also consider a renovation/update on the property after the renters move out, and before you move in, to really make this new residence your ideal downsize... Then if you want to, you can go buy a new dining set, if you must =)
Is it really that easy? Well, not as easy as your life will be after you use the Downsizer's Bridges...
Hopefully you are just in the initial stages of thinking about a downsize, so you have time to visit the Real Estate Planning and Lifestyle Marketing pages, not to mention Buying a Lifestyle (which would probably be of value to you as well). If it has been a long time since you have bought and sold, then visit all the pages, especially I like Coffee or better.
* If you have heirlooms or items of a very significant value, our affiliate Christie's Real Estate has grown from Christie's Auction House. We have connections, it just takes time.