Q. A recent article showed the year to date returns on Couch Potato portfolios with Vanguard funds. Unfortunately, I have all my money invested in Fidelity funds. Could you please provide a comparable traditional mix and newer mix with Fidelity funds?

----P.M., Plano, TX (by e-mail)

  

        A.   Fidelity is ecumenical when it comes to distribution channels. But it has always been a stock-pickers shop. That's why only 7 of its 162 funds are index funds. Even that figure overstates the true number of index funds because it includes the Four-In-One Index Fund. Four-In-One is a "fund of funds" that invests in four of their index funds.

Duplicating the Couch Potato Portfolio on the equity side is easy. You can put your money in their Spartan 500 Index Fund (ticker: FSMKX, minimum investment $10,000, expense ratio 0.19 percent) or in their Spartan Total Market Index (ticker: FSTMX, minimum investment $15,000, expense ratio 0.25 percent).

Personally, I've been inclined toward the Total Market choice since it became available from either Vanguard or Fidelity. Total Market incorporates the entire domestic equity market. That means you should get a bit of extra return from the inclusion of small and mid cap stocks.

Sadly, Fidelity doesn't make it easy on the fixed income side. While their U.S. Bond Index fund (ticker: FBIDX, expense ratio 0.31 percent) is the equivalent of the Vanguard Total Bond Market Index Fund, the minimum initial investment in both taxable and retirement accounts is $100,000.   So if you're going to be a true Couch Potato investor at Fidelity, you'll have to be a pretty rich one.

The best option, I think, is to do a "next generation" Couch Potato Portfolio and invest in the Fidelity Inflation Protected Securities Fund (ticker: FINPX, minimum investment $2,500, expense ratio 0.69 percent but currently capped at 0.5 percent). It isn't an index fund and it's managed, but, like the other funds that specialize in Treasury Inflation Protected Securities, this fund is likely to do what savers want in their retirement plans--- accumulate a real return after inflation.

Why does Fido set the minimum investment on its one indexed bond fund so high? We'll look into that in my next column.

  

  Q. I am a 40-year old single mother and have worked for the last 15 years but never long enough at any one employer to earn pension benefits. I have some money in IRAs but they are doing poorly right now. Do you think that Social Security benefits will be around when I retire and, if so, am I a fool to think that I can survive on that alone? How dire is my retirement outlook?

  ---A.R., Dallas, TX

  

  A. According to the letter from the Social Security Commissioner that is included in your annual Social Security Earnings Statement, benefits will have to be cut by 27 percent around the year 2041 unless something is done to improve the funding of Social Security retirement benefits.

  That would be when you are 78 years old, so I think your concern is legitimate.

  The benefits crisis, however, is likely to occur long before you retire because the Social Security Commissioner assumes there will be no benefits reduction until the Social Security Trust fund and all its accumulated interest is exhausted. If you examine the Social Security Trustees projection of revenues and benefits excluding Trust fund interest, the cash flow crunch will occur before 2020, when you are in your late 50's.

The most important fact here is not that Social Security will be in crisis in 2020 or 2040. It is that the level of benefits is at issue, not the existence of benefits. People tend to talk about Social Security in all-or-none terms. A more realistic view is that benefits will be squeezed, whittled, and cut but they won't disappear.

What does that mean for you?

First, it means that your savings are important even if they are small.

Second, it means that you need to take steps to prepare yourself. Those steps would include finding a way to own a modest home or condo. Another good move would be to find another woman, or group of women, willing to share expenses.

Finally, you will not be alone. Social Security Administration figures show that 40 percent of all retirees get at least 80 percent of their income from Social Security.