Q: I have a retirement account through a government job that I started five years ago. There is not a lot of money in [the account]. Should I keep it or use it to buy rental property?
–M. Trice, Nashville, Tennessee
A: Since you believe the amount in your account
may be large enough to help you purchase property, I would encourage you to keep it there, as it will continue to earn interest tax-free until your retirement. It is always a good idea to have an easy way to invest a consistent amount toward your retirement every paycheck.Because the
economic climate has been so poor, you should reassess the investment choices available under your government retirement plan, find out which investments are right for you now, and consider adjusting your investment mix. You should also consider increasing the amount you contribute to your retirement account each paycheck. By contributing more, you take full advantage of placing pretax dollars toward your retirement, which lowers your taxable income, thereby lowering your tax bill.As for purchasing property, there are several home ownership programs that you may qualify for without having to disturb the retirement money. Many financial institutions have first-time homebuyer programs that require little or no money down. There are also down-payment assistance programs you can research. Ask your local banker to assist you in finding the right program. You can also contact the AmeriDream Charity (www.ameridreamcharity.org) or the Nehemiah Program (www.getdownpayment .com) for information on receiving down-payment assistance for home purchases.