Lower Returns the Drawback of Safe and Accessible Savings

Question: We are seniors, both in our early 80s. We have about $80,000 in certificates of deposit about to mature and we are faced with paltry interest rates of 4% to 5%. At times, your columns have given examples of future returns using an assumption of 10% interest. Where are these investments and are they safe for us?

Answer: The 10% figure refers to the average return you might expect over time from a broadly diversified portfolio of stocks--not an interest rate you can expect from any safe or guaranteed investment.

You’ll notice those assumptions of future returns are given in response to questions from younger investors who typically have 20 years or more before they need their funds and who can afford to take some risk. Obviously, that’s not your situation.

If you need to keep your money safe and accessible, you unfortunately need to accept much lower returns. If you’re getting more than 4% to 5% on your money, that means you’re taking some kind of risk. The higher the return, the greater the risk. If someone is telling you something different, they’re trying to snow you.

Legal and Financial Benefits of Marriage

Question: In a column regarding marriage penalty tax relief, you referred to the numerous tax breaks and other benefits enjoyed by married people. Could you please note specifically the benefits to which you refer? Is there something we could be missing in filing our federal, state and local taxes?

Answer: Indeed, you’re missing a lot. In fact, there are so many legal and financial benefits to marriage that it would be impossible to include them all in a single column. But here are some of the most notable.

First of all, consider the tax tables you use to file your return. Only married people are allowed to file their taxes jointly, and--as noted in the previous column--more people benefit from filing jointly than pay a “marriage penalty.”

Married people can get a good deal when it comes to health benefits, as well. The amount your employer pays to extend insurance coverage to your spouse is not considered taxable income to you. But the employer’s contribution probably would be considered taxable income if the person you were covering were a domestic partner. Because health insurance is expensive, people who opt for domestic partner coverage often find their tax bills growing by hundreds or even thousands of dollars a year.

Then consider retirement benefits. After your spouse dies, you can continue to receive Social Security checks based on her employment record or pension checks from her employer. Social Security and pension checks usually stop when an unmarried person dies, which can leave a partner without income.

Married people typically are entitled to a portion of their spouse’s other retirement benefits, such as 401(k) contributions and earnings, accumulated during a marriage. Unmarried partners typically are not.

Married couples also get special treatment at death. Married people can pass an unlimited amount of money, property and other assets to their spouses, free of estate tax, when they die. Unmarried people are limited to the prevailing estate tax exemption, which is $675,000. Amounts above that are subject to estate tax.

Furthermore, married people have automatic inheritance rights, even if their spouses die without writing wills. If an unmarried person dies without a will, his or her whole estate could go to parents, children or other relatives, rather than to a partner.

As a married person, you have other legal rights denied the unmarried. You typically can make medical decisions on behalf of your incapacitated spouse without special documents or a court hearing, for example.

So in purely financial and legal terms, marriage can be a pretty good deal, even without marriage penalty relief.

Asking for ID Fights Credit Card Fraud

Question: Is there a federal or state law that forbids a retailer from asking for any identification when presented with a signed credit card?

Answer: So, did you just browbeat some poor clerk who was only trying to do her job? Go back to the store at once and apologize.

There is no such law. Many states prohibit retailers from writing a credit card number on your check, which may be what has you confused.

But you should be happy when a clerk asks to see some identification. She’s actually taking the time to ensure some criminal isn’t using your card. And while she’s doing it to benefit her employer, who might get stuck with the bum charges, she also might save you the hassle of having to argue with your credit card company about fraudulent charges.

So try to be nice next time a clerk asks for ID. You might even say thank you.

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Liz Pulliam Weston is a personal finance writer for The Times and a graduate of the personal financial planning certificate program at UC Irvine. Questions can be sent to her at moneytalk@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. She regrets that she cannot respond personally to queries. For past Money Talk questions and answers, visit The Times’ Web site at http://161.35.110.226/moneytalk.