It's not the purchase price that's the biggest obstacle, but rather the continuing costs

Carrying costs for two properties, even without mortgages, can be steep.

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Dear Fix My Portfolio,

I'm a 71-year-old widow. I would love to buy a condo in Florida and keep my paid-off home in Illinois. Can I afford it? I have around $2 million in a retirement portfolio.

Wannabe snowbird

Dear snowbird,

Winters in Florida are a draw for many retired people. There are options to buy at all different price points, so surely you could find something you could afford. But the real risk you have to consider is the continuing maintenance of two places.

Let's first talk about cash offers. Florida is one of the hottest markets for all-cash offers, with 41% of sales happening without a mortgage, according to Realtor.com. (Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.) In that kind of highly competitive market, you have to come ready to play. All-cash is actually better for you in terms of your ongoing budget, but it's going to restrict some of your options.

You could fly into a major metropolitan area like Miami to scout places and easily plunk down your entire $2 million nest egg in one day. So you're going to want to figure out what portion of your investments you'd be willing to put toward home equity. You could look at this as part of your fixed-income bucket - you could buy a REIT, or you could buy a second home. You could also look at it as part of your legacy planning. You'll live your life, spend your savings, and the condo in Florida and your house in Illinois can be what you leave behind for your heirs.

Using half your portfolio to purchase a second home might be too risky. That would leave you with $1 million, but you'd be managing two households and traveling between them. That doesn't provide a lot of wiggle room to deal with emergencies like hurricanes or tornadoes, or with increased healthcare costs as you age.

Is a quarter of your nest egg still too much? That would give you a budget of $500,000, which can go pretty far in many parts of Florida. If you plan to spend less than that, it will limit the kind of place you can buy in popular destinations. To get more details about this, you'll have to look at median condo prices for the area where you want to live in Florida and see where real-estate prices are now. Your costs will also depend on whether you want a one-bedroom or a larger place.

You also have to consider the longer term. What's the plan when you can't travel back and forth anymore? Will you stay in Florida full time, like many people do, or go back to Illinois? If you're going to end up in Florida, then you might want to consider buying into a community that will adapt to your needs, like a continuing care retirement community. That will add to your initial costs but could save you money in the long run as you get older and potentially need more care.

Ongoing costs

With your home in Illinois paid off and a cash purchase in Florida, you're largely sparing your monthly budget, but not completely. You'll still owe property taxes in two places, plus utilities and upkeep. The Florida condo will come with some sort of monthly maintenance fee, even if you buy into a CCRC. And if you don't drive back and forth between your homes, you might need a car in both places.

This is where you really need to have a handle on your functional budgeting in retirement. As you look for a place in Florida, consider not just the purchase price, but also the monthly charges, transportation options, insurance needs and possible emergency costs. Definitely check the meeting logs of the condo association to see what special assessments it has had recently, and at what frequency. Coastal properties in that state take a beating, and insurance companies charge accordingly.

You also want to budget for a little fun. The point of getting a second home in a warmer state is to live it up. Are there any expensive hobbies or interests that you need to consider? Boating, in particular, can add up. Pickleball or mahjong, not so much.

Remember that the purchase price and your monthly spending are intertwined. The more you spend on buying the condo, the less growth you'll get out of your portfolio because of your decreased principal. Your $2 million now generates about $160,000 in growth (at 8%), but if you go down to $1.5 million, you'd reduce that to $120,000 a year.

When it comes to your actual budget, that figure is probably a lot lower, because people tend to be conservative with their spending for fear of running out of money. If you stick to a withdrawal rate close to 4% on that $2 million, you'd have about $6,500 a month to spend from your savings, plus $4,300 in Social Security (the amount you provided when you answered the MarketWatch Retirement Questionnaire), for a grand total of $10,800 a month. After a $500,000 purchase, that would go down to about $9,300 a month.

One thing you might want to consider is getting an annuity for part of the fixed costs of the condo, like the maintenance or the whole carrying cost of both properties with insurance and taxes. That way, you'd know those expenses were covered and you'd be able to adapt the rest of your spending around that. There's a great argument for this approach in a new book from Jean Chatzky called "The Forever Paycheck," which is coming out in September.

The goal with an annuity is to put down a lump sum today that will give you a payout for the fixed costs you want to cover for your lifetime. At today's rates, a single premium immediate annuity for a 71-year-old female would get you about $700 a month for every $100,000, according to the age tables at ImmediateAnnuities.com. So say you spend $300,000 for a condo and $200,000 on an annuity. That might cover about $1,400 a month of your fixed costs, plus you'd still have $1.5 million growing in your portfolio.

You can adjust those numbers as you need or get specific numbers for your case from an insurance agent or financial adviser who sells insurance products. It's all possible - you just have to go into it with your eyes open.

You can also join the Retirement conversation in our Facebook community: Retire Better with MarketWatch.

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-Beth Pinsker