Q: I am 61 years old and have about $500 a month to use either in funding my Roth IRA or I paying down my mortgage.

Currently, my mortgage is for 15 years at 5.81 percent. I plan on retiring in June 2009. Which should I do?

A: Hands down, fund your Roth IRA.

Here’s why: The interest rate on your loan is so cheap, so it isn’t costing much to borrow the cash. You already have a 15-year mortgage, and while you haven’t told me how soon you will pay off this loan, you’re already paying down the principal pretty quickly.

I do understand your interest in helping yourself cash-flow wise, but you’re talking about putting maybe $6,000 toward the principal of your loan over the next year until you retire. I suppose if you only need $6,000 to pay off your loan entirely, then it might be worth it.

However, given where the stock market is at the moment, you might have a greater opportunity to do better by investing in a low-cost well-diversified mutual fund than by paying down your mortgage. When you pay down your mortgage, every dollar you prepay effectively earns you your net rate of interest. If you itemize on your federal income taxes, your net interest rate is below 5 percent. That’s excellent.

The likelihood that you can earn at least 5 percent on your cash is pretty good, which is why investing the same $6,000 in a Roth IRA, where your earnings are tax-free forever, might be a better deal.

Because you’re at least 50 years old, you’re allowed to put away $6,000 in a Roth IRA this year and next, provided you earn at least that amount. I’d make the most of it, and try to put away the maximum. When you retire, a Roth IRA will give you additional flexibility.