Whether you should insulate or replace your furnace first depends on the situation in your house. Factors that influence this decision are the age and efficiency of your furnace, and the amount of insulation currently present in the house.

In general it is more cost-effective to upgrade insulation than it is to upgrade your furnace. However, if your furnace is old, and you are planning on replacing it anyway, you might want to upgrade the furnace if you have to choose between the two options. The average lifetime for a furnace is between 15 and 20 years. The efficiency of furnaces has increased over the years, so the older a furnace is, the more likely that furnace is to be inefficient. The average efficiency of new furnaces has increased from 63% in 1972 to 83% in 1995. Older furnaces, and furnaces which are used a lot are more cost-effective to replace than newer or infrequently used furnaces. Also, if you insulate your house at the time of furnace replacement, you might be able to buy a smaller capacity furnace and save money on the price. The same holds true for A/C and other heating and cooling equipment.

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