Replacing the insulation will make your home more efficient. Over the years, it is common for insulation to settle and the shrunken insulation you described probably isn't doing the job you need it to do.
Attic insulation is most effective when it is fluffy and traps air between its fibers. So our advice is to remove and replace what you have with new material. We'd recommend two layers of insulation, with the first one being installed in the spaces between the ceiling joists, and a second layer laid perpendicular to the first layer on top of the ceiling joists. In most areas of the country you should have 19 total inches of insulation.
Having too much attic insulation is generally not a problem, so long as you make sure it is properly installed and that the attic is ventilated. In the best-case scenario, we recommend continuous ridge and soffit venting. These vents are installed on the top ridge of the home as well as the underside of the soffit. They work together to circulate air up from the soffit to under the roof sheathing and out the ridge, flushing lots of moisture along the way. This is important since damp insulation can lose as much as one-third of its ability to insulate. Ridge and soffit vents also help keep the attic cooler in the summer, improving air conditioning efficiency and adding to the benefits provided by replacing the attic insulation.