If I were you, I would be thinking, "How does that work?" Well, as it turns out, it's not as difficult as you would imagine. There is a special kind of IRA or 401K - called "self-directed" - that allows you to invest in whatever you want, whatever you understand. Real estate is included.

You better believe there are plenty of excellent reasons to invest this way, not least of which is the fact that income taxes on the money are deferred until retirement. Your tax rate will probably be lower then, and so your money will grow fast now, AND last longer when you need it.

Second, your self-directed retirement account will let you put your money where you are most comfortable - and where you know something. If real estate is your thing, why not invest your money there, instead of some mutual fund you know absolutely nothing about? How about buying a rental house in the neighborhood right next to yours?

Of course, you must follow the IRS rules for setting up such an account. Don't worry, though, because the trustee you choose to manage the account will know the rules, and they will be able to advise you accordingly. Probably the primary rule is that the real estate must be owned and paid for completely by the retirement account, not by you individually.

This rule can increase your costs and aggravation a little, because you can't just pay for things out of your own checkbook, or deposit rents received into your own account. It all has to go through the IRA or 401K, and that means you will need to pay fees to the account manager /trustee. Not convenient, but not a deal breaker either.

Losing money is a real possibility, and you should be aware of the possibility. Real estate my be relatively safe as investments go, but there are no sure things. Remember, however, you will be the one with the final say on where your investment dollars go. That's what "self-directed" is all about.

Lastly, think carefully about whether or not self directed IRA or 401K investing in real estate is right for you. It's simple to put in place, and it just may be the vehicle you have been searching for. Should you really allow some anonymous money manager in some distant city to control YOUR retirement funds?