Decisions about a new iMac

8GB of RAM is fine for your needs but I'd get 16GB as these machine cannot be upgraded after buying. NEVER EVER buy less storage than you already have! So if the old machine has 512GB then buy a new 512GB (or more) model.

Trackpad or mouse, is totally personal preference. I like using the MTP but many many others prefer the mouse.

By the way, did you know Apple has 12 month same as cash financing? When you contact Apple's online store ask them about this!! I've done this several times and just set up my bank to send 12 equal payments and 1 year later it's paid with zero interest.

When you make your decision, make a Time Machine backup of the old machine, refer to Back up your Mac with Time Machine you will need an External Hard Disk and I would suggest the OWC Mercury Elite Pro. Backblaze is worthless for migrating to a new machine, in other less blunt words it simply will not migrate to a new machine whereas Time Machine will. If you don't heed that advice you will NOT be happy. Regarding migrating to the new machine, please read the advice below for migrating:

When you buy a new Mac the easiest, quickest and most reliable method to migrate from the old Mac to the new Mac is to simply connect the old Mac's Time Machine External Hard Disk to the new Mac using a USB cable before you turn on the new Mac. You will likely need a USB A to USB C adapter, you can find them on Amazon for $10 or less. When you start the new Mac for the first time it will startup Setup Assistant (SA), SA will get to a point where it asks if you are migrating from another computer, select Yes  and follow the on-screen prompts and it's done! It is THAT simple.

If you have already done SA on the new computer then simply connect the Time Machine External Hard Disk using a USB cable and launch Migration Assistant (MA) which is located in Applications - Utilities - MA. Then follow the on-screen prompts. 

The ONLY difference between MA and SA is MA will create a new user account that you need to log into.

Both SA and MA migrate applications (not 32 bit apps), data files & settings. They do not migrate Mac OS itself. Some professional apps such as Adobe and Microsoft apps may require re-installing their apps as they will not allow them to be migrated. As long as you kept the security keys for installing their apps, it is not an issue. 

Finally, never EVER use Wi-Fi when doing Setup Assistant or Migration Assistant. Why, it simply fails in most cases. Please read and follow the directions in Setup Assistant and Migration Assistant. If you do not have a Time Machine backup of the older Mac then create one! If you are not aware of Time Machine, please read Back up your Mac with Time Machine and finally if you need an External Hard Disk to use as a Time Machine External Hard Disk then many experience users on these forums prefer the OWC Mercury Elite Pro due to it's reasonable price, high level of quality and ease of use. 

By the way, I'm 69 and on a fixed income too.

FWIW, I would choose 16GB & the 512GB SSD. You can always add external storage if need be. There have been reports that the 256GB SSDs in Apple silicon Macs are slower than the 512GB and larger SSDs. I suspect that may also be the case with the M3 iMac.

8 GB memory is fine, so is the 256 GB SSD, no need to pay extra. The Trackpad is superior to the mouse, excellent value, add.

Hi there. I have 27" iMac late 2013 and it is still running strong and reasonable fast. Where it is failing is HD space. 250 GB only. My photos alone are maybe 90 GB and obviously I had to transfer a lot of them to external HD. So If I would be buying new iMac today I would buy as big screen as possible and with not less that 500 GB HD. I never tried trackpad, always mouse. Try it in the store and decide which one you like better. One mouse failed on me and now I am using some general type Logitech mouse that I don't like much but it does the job.

Pay utmost attention to keyboard. I consider Apple keyboards the best, but if there is a choice I would take full size USB keyboard rather than what they offer today, wireless mini keyboard! They need batteries and lack of wire doesn't make sense since keyboard is at 10-20 cm from the screen anyway. Nobody types across the room, right? I actually swap keyboard from time to time with mechanical keyboard that I received with my first iMac in 2009. It is slanted, white of course with raised keys. I love "retro" look, feels good to type. Drawback are that it is somewhat loud and doesn't have all F keys as my existing flat keyboard does. Especially I am missing F3 "display all windows" key. So flat keyboard wins and I am using it the most.

Note that memory on all of the Apple Silicon Macs introduced to date is non-expandable. Whatever you get at the time you buy the machine is what it will have forever.

The reports were that 256 GB SSDs in M2-based iMacs were slower than 256 GB SSDs in M1-based iMacs – due to the use of a single 256 GB flash chip, instead of two lower-density 128 GB ones.

Some of the reports showed benchmark results indicating that while the "slow" 256 GB SSDs couldn't hit the speed of the 512 GB SSDs (or of Thunderbolt 3 ones), they were still faster than any USB 3 / SATA SSD you could buy. For someone who was a casual user (but had lots of photos, videos, music, movies, or games), running out of space on the 256 GB SSD might be more of an issue than the speed of the SSD, per se.

You're welcome.

FWiW, the Magic Keyboards act as a wired USB keyboard when the charging cable is plugged in.

Your welcome and enjoy your new iMac!