Question: My husband is 48 years old, self-employed, with only his IRA and Social Security benefits (we hope) to rely on for retirement income. The trend of inflation has us worried about the future. We have some money in six-month CDs, but no long-range plan. With $20,000 available now, what would be a good investment for a steady future retirement income?

Answer: You're putting the cart before the horse. You shouldn't be looking for a steady retirement income until you're a lot closer to actual retirement, which I imagine you don't plan until your husband reaches age 60 or later.

Instead, your concern now should be growth of the $20,000 into a larger capital base -- which in turn can be expected to generate greater income for retirement when the time comes.

If you were going to retire pretty soon, I would suggest a corporate bond unit trust, a good individual corporate bond, a couple of high quality utility stocks, a good common stock with a record of frequent dividend increases -- or some combination thereof.

But with at least 10 years for growth of your nest egg, my choices would be a little different: a growth-oriented mutual fund, a couple of low-risk growth stocks, a utility stock with a subsidized dividend reinvestment plan, perhaps a high-interest single-payment deferred annuity.

The real message here is that you must properly define your goal (growth rather than income at this stage) before you can design an investment program. Establishment of the goal makes it possible to narrow the options to a more manageable number.

Then you can select one or more of the options that can fulfill your goal by applying a couple of other yardsticks, like your tolerance for risk and your present investment portfolio.

I'm curious to know why your husband doesn't have a Keogh plan in addition to an IRA. He can invest up to 15 percent of his 1982 earnings from self-employment up to a $15,000 ceiling. You might think about using some of that $20,000 to set up a Keogh plan this year.

In addition to deferring tax on the accumulating earnings, you can get an immediate reduction in your taxable income and save a bundle on your 1982 tax liability.

Q: I would appreciate a further clarification of the IRS rule pertaining to non-deductibility of margin interest in the same period as receipt of tax-free bond interest. Does this rule apply to margin interest expense incurred during a period when tax-exempt contributions are made to an IRA?

A: No. You must remember that contributions to an IRA (and subsequent earnings on those contributions) are not tax-exempt, but rather tax-deferred.

So an IRA contribution would not by itself disqualify an otherwise eligible Schedule A deduction for interest expense.

In fact, you're still okay even if you borrow money specifically to deposit into an IRA. You can claim the interest deduction for the loan and not lose the income adjustment for the IRA contribution.

But don't borrow money from the IRA account itself, or pledge the assets in the IRA for the loan. Unless you've reached age 59 1/2, that would constitute a premature distribution and would trigger a 10 percent tax penalty.

I continue to hear from readers who wanted to roll over IRA money from a savings institution certificate to some other investment and were surprised by a penalty charge on the withdrawal.

The common complaint: "You said there is no penalty on an IRA rollover if the funds are reinvested within 60 days."

And that is what I've said -- but I was always careful to qualify it as no "IRA penalty." That is, under the IRA rules you may make one rollover a year from one investment to another without incurring tax liability or penalty (if you obey the 60-day requirement).

But the IRA rules have no effect on the depository institution rules that impose a penalty for early termination of a certificate of deposit.

So if you're using a CD at a bank, S&L or credit union for you IRA funds, you may be charged a substantial penalty if you attempt a rollover out of the CD before it matures.