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Dear Liz,

I’m 41 and recently retired from the military, with a before-tax pension of $2,175 per month. I also have temporary income of $1,000 a month from going to school on the GI bill. I owe $160,000 on a house at 3.5% and $17,000 on a late model car, but that’s all. I have $53,000 in the federal Thrift Savings Plan, or TSP, that I can leave there but can’t add to. I also have $16,000 in a savings account that pays next to nothing. I’m not really interested in moving the TSP money; the returns are really good and the expenses are lower than most anything else I could find. Should I do anything with the cash in the savings account? I don’t need it to live on, but I do like the security of knowing it’s there.

— Paul

Dear Paul,

The federal TSP is an excellent place to keep your retirement savings. When you return to work, you can see if your employer offers a good-enough 401(k) to make it worth transferring your retirement account. If not, you can leave the money in the TSP to grow while contributing to the new plan.

Search for great rates on savings accounts

You’re not going to find great returns in a savings account in the current economy. A savings account at an online-only bank will likely offer more than what you’re getting from a traditional bank, but rates are still quite low. Getting higher returns means taking more risks, which is not what you want to do with money you may need in an emergency. Emergency funds should be kept in safe, liquid accounts insured by the Federal Deposit Insurance Corp.

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The key to knowing where to put your money is your time horizon — how long it will be until you need the money. You won’t need your retirement account for at least a couple of decades, so most of the money should be in stocks, which offer the best long-term returns. When your time horizon is short, though, you’ll want to keep the money in savings accounts, certificates of deposit or other low-risk investments, since you don’t have the time to ride out any stock market fluctuations.

Ask the adviser

To ask a question of Liz Weston, go to the “Ask the Experts” page and select “Retirement” as the topic. Read more Retirement Adviser for additional personal finance advice.

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