There's a long checklist when deciding where to live, especially in your retirement years

Dear Help Me Retire,

I'm 68 and collecting my deceased husband's Social Security benefits. I intend to file for my own benefits at age 70. Should I purchase a $635,000 home with half of my 401(k) funds and hold a mortgage for the other half of the total amount?

Widowed Home Buyer

Dear Widowed Home Buyer,

I'm wary of you using half of your 401(k) balance to buy a house, even if you are receiving Social Security survivor benefits and will get a potentially higher monthly payment when you claim your own retirement benefit in about two years.

Your letter doesn't give many specifics, such as what other savings or investments you may have or what your spending is like compared with your income, but let's focus on the one piece of information you did share: the plan to use more than $300,000 - or half of your 401(k) balance - to purchase a home. That would leave you with roughly $300,000 to draw on over your lifetime. Do you think that's enough?

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One of the biggest fears Americans have is running out of money in retirement. A plan to spend half of your account balance to purchase a home leaves you with two issues: the first is a diminished 401(k) plan to withdraw from regularly, or at least fall back on when necessary, and the second is that you'd be adding another bill to your living expenses. This is not to mention the other costs that come with owning a home - maintenance and repairs, insurance, utilities, taxes, perhaps furniture and so on. That's a lot to take on.

Don't be hasty with this decision. Run the numbers a few times under a few scenarios to see if this move actually makes financial sense. Compare how this new expense will fit into your monthly or annual budget, and if it will require drawing even more from your savings. Also take into consideration how much, if anything, you have in emergency savings.

If you don't have an emergency fund, prioritize that before any home purchase. Think about your other everyday expenses, like groceries or medications, and how those costs might rise in the future. This is all one big puzzle, and if you're going to buy a new house, you have to make sure that every piece fits.

Financial comfort

Now be honest with yourself about the added expenses that come with such a purchase.

This isn't just about feeling financially comfortable - it's about actually being financially comfortable. What you feel and what the numbers say on paper are not always aligned. You could think you're in great shape, but then you look over your account balances and realize you're withdrawing from your investments at a much faster pace than you thought.

Consider longevity - yours as well as that of your mortgage. Do you intend to take out a 30-year mortgage? Or are you looking to expedite the payoff so that you don't have mortgage debt for he rest of your life? Can the rest of your savings weather major expenses that could arise in old age outside of homeownership - mainly, healthcare or long-term-care needs?

On the flip side, longevity would do your 401(k) good. Not only would you be losing half of your balance by taking this money out to purchase the house, but you'd also lose out on potential returns. The account would have less money to compound over time with investment gains.

And how comfortable are you now with your monthly expenses? Do you live in a paid-off home and would now have to start making a monthly mortgage payment? Or are you renting, with this mortgage payment simply replacing what you're already paying for housing?

Retiree housing decisions

Where to live in retirement is a huge decision, and not one to be taken lightly. There are plenty of people who are thinking of uprooting themselves and moving across the country or overseas, but the decision is a big one even if you're simply looking to move a few blocks away.

There are costs to aging in place, such as making improvements that assist with mobility in the home. There are also the costs that come with buying a home, including taxes, insurance and attorney fees.

Your goal is to find a place that checks all of the boxes for you. Before even filling out the paperwork for a mortgage preapproval, think about what you will need out of a home in the next few decades. What amenities do you need to age in place? Is the home near your doctors and healthcare institutions? Are there fun things to do in the area all year long? Do you need your own transportation or can you use mass transit? And what kind of upkeep is required inside and outside of the home? Will you have to worry about shoveling snow in the winter or bagging up an acre's worth of leaves in the fall?

You shouldn't run to buy a home with half of your retirement account until you can answer all of these questions, at least.

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Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

-Alessandra Malito