Q. I recently purchased a large (for me) amount of the Lehman 1 to 3 month Treasury bill ETF. How would you estimate the risk of that investment in light of Lehman's current financial position? Is this still safe, based on the Treasurys? Or is it high-risk because of being with Lehman?---L.B., by email
A.Not to worry. You’re nowhere near the wreckage. The Lehman 1-3 month Treasury bill ETF (ticker: BIL) is based on an index Lehman produces. The actual ETF is a SPDR (Standard and Poor’s Depositary Receipt) sponsored by State Street Global Advisors.
Q. I am 40, single, and my estate is worth around $300,000. I have never been married. I am thinking of getting married in the near future.
A. Most people have pre-nuptial agreements to protect the interests of their children from earlier marriages. And they only have them if their accumulated assets are substantial. You could protect a portion of your current assets by seeing an attorney and learning what you can make into “separate property” that would not be included in the marital estate.
That said, I find your concern disturbing. Marriage is a team effort. It is best started with an open heart, and without defenses. Your future wife will be an intimate part of the joint estate the two of you create. Even if she doesn’t work, marriage will endow her with spousal Social Security benefits. If she does work--- and you indicate that she does--- she will save and invest as you do. And living together will create “economies of shared living” that will benefit both of you. Your future wife is an asset in every sense of the word.
You may think I am a hopeless romantic, but if you are truly concerned about protecting your assets, you may not be ready for the promises you make on the day you marry. It is not hopelessly romantic to believe, as I do, that a good marriage can only be achieved when you embrace those promises without reservation.
Q. As of July 2008 I am 66 years old. I make about $90,000 per year, and I plan to work another two or three years. Should I file for my Social Security benefits now? ---W.R., by email
A. If you don’t need the money, don’t apply. With wage earnings of $90,000 a year, it is a virtual certainty that you’ll pay income taxes on 85 percent of the Social Security benefits you receive. So let’s do the math. If your benefit for the current year was about $1,750 a month, you would net $1,116 a month after taxes, and it would earn very little over a 12-month delay period. If you could earn 2 percent on that amount, tax-free, it would accumulate to about $13,500 in a year.
At age 67 you could use that money to buy an inflation-adjusted life annuity that would provide a monthly income no greater than $81 a month, if you were not penalized for such a small investment. (The figure I use is based on an investment 10 times larger.) About 75 percent of this amount would not be taxable, so your after-tax net would be about $76 a month.
The monthly increase in your Social Security benefit, achieved by simply delaying a year, would be 8 percent of $1,750 a month. That’s about $140 a month, 85 percent of which would probably be taxable. So your after-tax net would be about $110 a month. That means delaying by a year would give you about a $34-a-month advantage over trying to invest the benefits.