After she was widowed, My DMiL, moved to live near us. She bought a one bedroomed flat a few hundred yards away from us. It worked very well, even when she was ill and housebound because we were so close at han. It was easy for DD to look in on her way home from school and run errands, and we could call in of an evening, without any problem.
*Grammaretto, if you plan to downsize and share a house, make sure you both have separate living rooms and bathrooms as well as bedrooms, even if the kitchen and dining room are shared space. Ideally, one living upstairs , one living down.
The flat needed work so she lived with us for three months before moving in. It went very well, she was easy and uncritical to live with, but we both admitted it was nice to have our homes to ourselves, once she moved to the flat.