Q. Our youngest child graduated from college last year. Since then we have been able to save a bit more money. By June 2009 we will have 42 months left on our mortgage with 6.8 percent interest. The payoff is projected at about $40,000. My question: Should we pay off the mortgage at that time, or ride out the remaining few years? ---L.B. by email

A. You didn’t say where you lived or what your real estate taxes are, but there is a good chance that you will receive no tax benefits from your mortgage interest payments because all of your deductions may be less than the standard deduction. This year (2009) the standard deduction is $11,400 for a couple and $5,700 for a single person household. Until your itemized deductions exceed the standard deduction, you won’t save any taxes.

Many couples start running out of itemized deductions right at your life stage--- when the last kid is out of the nest. So here is your task. Add up your itemized deductions. If the total is less than $11,400 paying off your mortgage is a slam-dunk investment. You’ll save the mortgage interest. In effect, you’ll earn 6.8 percent. You’ll also eliminate the monthly mortgage payment, which will make it easy to increase your tax deductible 401(k) contributions. And you won’t have to pay income taxes on the piddling amount of interest you’ll earn on the $40,000.

Q. We cashed out an annuity. The interest on it was $76,000. Our gross income from other sources was about $45,000. We are retired and use the standard deduction. How will this affect the taxes on our Social Security? ---J.O., by email

A. The answer depends on how much you have in Social Security benefits. Suppose, for instance, that you and your wife receive $24,000 a year in benefits. Then you can have $20,000 in other income before triggering the taxation of your Social Security benefits. The next $12,000 of other income will cause $6,000 of Social Security benefits to be added to your taxable income. And the next $12,000 of other income will cause another $10,200 of benefits to be added to your taxable income. So $44,000 of other income--- less than your $45,000--- will cause you to have to pay taxes on $16,200 of Social Security benefits.

That’s the bad news.

The good news is that your regular income--- that $45,000--- gets you through the Social Security gauntlet. You’re done. That big annuity interest check is on the other side of the gauntlet because you’ve already been hit by the taxation of benefits.

As I’ve pointed out in many columns, what’s unfair about this is that if that $45,000 of other income comes from retirement savings such as IRAs and 401(k) plans, you’re a victim of our crazy-maker government. Congress encourages you to save with retirement plans, but first it sets a tax trap to punish you when you retire.

Q. I am trying to determine the best place to invest my 401K money after being laid off from my job. My accountant suggested a real estate dental building investment that offers a 7 percent to possibly 10 percent return. The investment would be handled through an IRA so that the taxes are deferred. What is your opinion of this type of an investment? ---R.W. by email

A. I hope you’re either kidding or have mis-understood your accountant. If neither of those is the case, your accountant is--- let me put this delicately--- a self-serving nit-wit. You’ve lost your job during what is likely to be one of the longest and deepest recessions in the last 50 years and your accountant suggests a single, undiversified, risky and illiquid investment when the most important consideration is being liquid--- being able to get the cash necessary to buy food and pay your bills until you are employed again.

If you ask your accountant for more information on the investment, there is a strong chance you will learn that the selling and underwriting costs of the investment--- a portion of which goes to the accountant as a commission--- will be about 10 percent. That commission goes a long way toward explaining why this investment was proposed. It makes good sense to him because he’ll benefit the day you make the investment. But it makes absolutely no sense for you.

My suggestion: Run, don’t walk, away from this investment. And, while you are at it, find another accountant.