Whether you hope to spend your retirement in a conch house in Key West, Fla., or a cottage in Cape Cod, Mass., it's tempting to turn the dream into reality early, at least for part of the year, by buying a second home. And boomers, the bulk of whom are just now reaching their high-earning years, have the means to do it.But before you tap your nest egg to buy your little piece of paradise, take time to figure out whether owning a second home fits both your lifestyle and your budget. Too often, what you envision while gazing at sales fliers on Duval Street in Key West is miles away from the realities of second home homeownership. Can you really afford it?

Answering that question is not as easy at it appears at first glance. After all, wealth is relative: One man's rich is another man's poor. To figure out if you have the funds to take the plunge, look at all aspects of your finances, from your monthly cash flow to your net worth. Any money over and above what's necessary to manage your lifestyle and continue to save for retirement and emergencies is discretionary. If you need to carry a mortgage, make sure that your discretionary money covers the principal and interest payment, taxes, insurance and then some.

Without a buffer, you will be in financial trouble if wildfires or hurricanes send your insurance premiums through the roof. If you plan to use part of your nest egg to buy the second home outright, make sure that you still have enough liquid assets leftover to fund your retirement. A good rule of thumb is for your retirement portfolio to be worth 25 times the amount you anticipate living off each year (for example, $2 million for an $80,000 per year lifestyle) plus extra for the home, says Jan Dahlin Geiger, author of "Get Your Assets in Gear!" Bankrate tip: Don't use the second home as a retirement savings vehicle.

Too often, people grow accustomed to owning two homes, and they never sell the first one in order to permanently move into the second, says Christopher Dalto, principal of Delessert Financial Services. Limit real estate to a conservative 10 percent to 20 percent of your assets. Remember the not-so-little extras. The true cost of ownership goes far beyond the second home's sales price, taxes and insurance. When you're calculating the cost, don't forget to add in these not-so-little extras: Duplicates of everything.

The second home will need major items, such as window treatments, rugs, furniture, appliances, and pots and pans, and you may want to leave extra sundries, including toiletries and clothes, there for convenience. Transportation. Not only do you need to pay to travel to and from your second home, but if you fly there, you will need transportation once you arrive, whether you rent a car, ship your own car, pay for cabs or leave a "beater" there year-round. Utilities. In addition to paying the monthly service fee for standard utilities, in some climates the air conditioning or the heater must run even when the home is vacant to ensure that mold doesn't grow or the pipes don't freeze. Maintenance.

Whether you pay someone or do it yourself, both the interior and exterior of the home require routine maintenance, such as housecleaning and yard work, as well as occasional big-ticket repairs, such as a new roof or hot water heater. And don't forget about homeowner's association fees. Bankrate tip: If you end up with lots of visitors at your second home, expect your food and beverage bills to go up as well, says Mark Mills, co-author of "Boomers! Funding Your Future in an Age of Uncertainty." Try before you buyOnce you're confident that you have the financial resources you need to buy and maintain a second home, test-drive the lifestyle before you seal the deal. For instance, rent in the area for several years to see if you will truly want to return to the same place again and again. "Make sure that the type of property that you rent meets your lifestyle equally to the property that you are going to buy," says Ric Edelman, author of "The New Rules of Money."

"Very often, people will rent a five-bedroom home on the beach, but they can't afford to buy that. They end up buying a small condo two miles from the beach only to discover that they don't really like living in that condo, which defeats the purpose." Also, figure out if your lifestyle will hinder your use of the second home. If you spend every Saturday shuttling your teen to soccer games, you won't have enough time left over to get away for the weekend.

If you must fly to get to your second home, think about how often you'll have blocks of time available that are long enough to make the trip worth the flight. Bankrate tip: Keep an eye on future growth in the community: Will the characteristics that drew you to the area vanish in five to 10 years due to rapid development? "Be aware of the pattern of growth there and how it's likely to impact what you view to be a little piece of paradise today," Mills says. Consider the alternatives: If you're on the fence about whether buying a second home fits your lifestyle or budget, consider some of the alternatives.

Rent a cabin or condo to get all of the perks of your prospective haven without the long-term commitment. Not only do you skip the cost and hassle of monthly maintenance, but if you grow bored or the area loses its charm, you can go somewhere else without losing money. If you want to own but don't want to carry the full financial burden, try fractional ownership, where several people pool their resources to buy and maintain a property. But proceed with caution when buying a second home with friends or family members. It can work, but money can ruin the best of relationships.

"The more people that are involved, the more complicated the arrangement becomes," Mills says. "You have to come up with a way to divide the usage that everyone feels is fair, and you might miss out on some key time periods that you would like to have the place." Plus, you need to think through things like who will handle collecting each owner's share of the maintenance costs and pay the bills, what will you do if someone dies or wants to sell their share, and how the property will be furnished and maintained.

If you don't want to be tied to one location or you'd prefer a business-only arrangement, consider buying a share of a property as part of a club, such as the Ritz-Carlton. Bankrate tip: If you buy the second home with the intention of renting it out for the majority of the year, remember that being a landlord is a job. If a pipe breaks at four in the morning, your phone will ring. Plus, if the property sits vacant for several months, you will need to dip into your own pockets to cover the expenses.Buy for you, not your bottom lineOnce you decide to buy after weighing the alternatives, remember that in most cases, a second home is a lifestyle purchase, not an investment.

"If you have some lifestyle element to it, even if it's not a great investment, it's of value to the family," Edelman says. "For the majority of people, real estate is a really poor investment," Geiger says. "Most people invest with a rearview mirror, and what happened in the past doesn't have anything to do, necessarily, with what's going to happen in the future. All markets run in cycles, and if it's been running in a really hot cycle for five straight years, it's probably getting ready to correct." Even assuming that the second home will appreciate at an average rate of 3 percent to 4 percent annually, the maintenance expenses will eat into the gain.

"If you took that same amount of money and just put it in CDs, for example, you get a straight 3 percent or 4 percent return, and you don't put any time or upkeep into it," Geiger says. Bankrate tip: Thanks to the subprime mess, it's possible to snap up a good deal on a second home, particularly in markets with a large speculative content, such as South Florida, Las Vegas and Southern California. But home prices in these areas are more volatile and, because they're resort areas, the property may be difficult to resell during a recession or slow-growth economy period, says Marc Louargand, president of the American Real Estate Society.

Time to move onJust as you weighed your options before purchasing a second home, you need to keep an eye out for signs that it's time to sell. When the burden of ownership exceeds the joy that you receive from owning it, it's time to move on. Real estate is a pricey investment, and many people do not use their second home as often as planned: Two-thirds of second home homeowners spend four weeks or less per year in the home, with half using the home for two weeks or less, according to a 2006 study for the Research Institute for Housing America.

But getting out can be as expensive as getting in, especially if you're selling the home for a loss in a down market. Conversely, if the property appreciated significantly, you may face steep capital gains taxes. If the second home was used as a rental property, Michael Eisenberg, owner of Eisenberg Financial Advisors, says that homeowners have options for reducing, delaying or eliminating any capital gains tax.