These days, everyone has a regained respect for stock market volatility. One way to maintain a more stable income in retirement is to take part of your nest egg and buy a single-premium immediate annuity (SPIA). With an SPIA, you pay a lump-sum upfront to an insurance company in exchange for a guaranteed stream of income payments for life. You’ll usually get a much higher income than from bonds or dividend-paying stocks. However, once you die, the payments stop and your upfront payment is gone.

How much income can you get?

The two main factors that affect your actual payout are your age and the current interest rate environment, but there are also additional options to consider. Here are a few of the biggies:

• Single vs. joint life. Will the payments be guaranteed for only one life, or the longer of two lives? This is a popular option for couples living together.
• Minimum guaranteed payout period. Some folks may hate the idea of losing your entire lump-sum in the event of an early death, or want a minimum payout amount. With this option, you can guarantee that payments will be made for a specific minimum period (i.e. 5 or 10 years) no matter what.
• Inflation-adjusted payments. With this option, your monthly payments will increase or decrease by a certain percentage each year, as pegged to inflation. This will protect you from decreased purchasing power in the future due to inflation, but will significantly decrease your initial payout.

Below, the July issue of Money magazine included a nice graphic that helps show how each affect your possible payouts based on a $250,000 investment. Data is from ImmediateAnnuities.com, a handy site to get free quotes.

What percentage of your income do you save each month? How often do you change computers? How shoudl you go about setting up a savings account with a long-term girlfriend (or boyfriend)?

In this week’s round-up of Q&A activity on Mint Answers, we feature these seemingly random questions – though when you think about it, they do have the same underlying theme: saving money.

Saving money is one of the most popular topics on Mint Answers, a relatively new feature we launched with the idea to give consumers a platform to voice their personal finance and investing questions and discuss them with other Mint users and community members.

Here are some answers to the questions above. For more, or to chime in with your response, click on the links below.

How do I set up a savings account with a long term girlfriend?

I have been with my girlfriend for 7 years, we recently turned 22 and are looking at putting some money away so that it is easier to take trips together.  Up until now we have simply put cash away.  How should we go about setting up a joint account?  Should we?

Answers:

1. Sure, if you’re on the same page about how the money will be spent, who will contribute what to the account and how often, etc. I’m assuming that you trust this person enough to stick to whatever agreements you make together about the account.

Keep in mind: you don’t HAVE to combine any part of your finances as a committed couple. It’s never a requirement, so don’t feel pressured into it. How you handle your money as a couple is up to you, but lots of people find a joint account (if not accounts) convenient and a big part of how they handle the money question with their Significant Others. Just make sure you’re both clear on the “rules.”

3. You can open a savings account solely for the purpose of saving for your trips together. Be aware, though, that if you are joint owners of the account one person can just clean it out without the other person’s permission. Of course, this hopefully will never happen, but I think as long as you trust your partner it’s a risk that is manageable. Speaking for myself only, I would not combine finances with a partner unless we are married or become legal domestic partners, but I would have a joint savings account  – assuming that I can lose my contributions to that account and still be okay. In other words, I won’t put in what I can’t afford to lose.

More answers to this question>>

How often do you change computers?

My first computer lasted me 6 years, but towards the end it was extremely slow and difficult to use. I’ve read that you should plan on changing your computers every 3 years. How long do computers last for you?

Answers:

1. Computers made these days are almost at the level where speed should not be much of an issue in determining when you should buy new, as long as you are maintaining everything. If you really want to keep costs down get an external hard drive and save everything to that, and then just use a cheap laptop or netbook and swap out for a new one each time they die.

2. I use ‘em until they die on me My first laptop lasted from 2003 to 2007, I bought a secondhand laptop in ’07 that was fine until 2009, and now I have a cute little netbook….

I use a computer for at least ten hours a day, so I need it to be reliable and not annoying (read: fast). It seems reasonable to buy a new one every three years or so. What does NOT seem reasonable is to buy a new laptop, a new desktop, a new smartphone, and a new notebook every three years.

More answers to this question>>

What percentage of gross income do you save each month?

This includes retirement, emergency fund, and other short-term savings.

Answers:

1. Last time some friends and I got in a discussion about this (yes, I know, fun times), we got to a sticky point about whether debt repayment counts as savings. “Nah,” I said. “Oh yeah? What about debt repayment above the minimum which could just as well go into a savings account?” “Hmm.”

Anyway, my answer is currently 33% of net. Gross is tricky to calculate, since I don’t have a pay stub handy and it includes some compulsory retirement savings.

2. My wife and I are also currently at around 40%. But we also really enjoy going on a large trip during breaks (wife is a teacher) so we end up spending a chunk of that so at end of year we are at around 25%.

3. It’s around 40-50% in good times, less in bad. Although I think that I’m definitely on the extreme end of things (doesn’t seem extreme to me though). I just can’t believe how some of my peers think 10% is way more than enough to retire someday. If you can get up to around 20-25% that seems like a much better place to be, but there’s no one size fits all.

4. While I would love to save like some of the above do the money just isn’t there right now (wife stays @ home with the kiddo).  I save for retirement between 8%-10% and then periodically contribute to a 529 as well as other savings goals e.g. car replacement, increased emergency fund etc. 

This has also reduced a little since we have recently shifted focus to paying off student loans so I guess I are be saving more if you consider the extra debt payments we’re making.

More answers to this question>>

Do you have a money question that you feel has no black-or-white answer? Go to Mint Answers and ask away! While you’re there, feel free to answer questions from other community members. Come back often, as we introduce new enhancements to this feature.

Banking titan Citigroup Inc. is paying $75 million to settle civil charges that it misled investors about its potential losses from subprime mortgages as the housing bust hit in 2007.

Posing as someone else and using fake birth certificates and driver's licenses to get a U.S. passport can still work.

Mortgage rates dropped to the lowest level on record for the fifth time in six weeks, making homebuying and refinancing the most attractive in decades for those who can get loans.

Thinner wallet, thinner waistline? Has the bad economy been good for Americans’ waistlines? Healthier eating habits may be a welcome side effect of more frugal spending habits. Restaurant-goers have less to spend, so when they eat out they’re choosing less expensive places and finding better deals, skipping cocktails, and passing on dessert, according to recent surveys from Zagat on dining trends in Atlanta, Washington, DC/Baltimore, Chicago, and Texas.  In addition, Zagat says that diners in those cities expressed interest in healthier menu choices and are willing to pay more for “green” (locally sourced, organic, or sustainably raised) food.  Another upside to our down-turned economy: you may find it easier to get a table at that popular restaurant you’ve been hankering to try. Our CR Survey (Ratings, available to subscribers only, are based on 70,403 responses to the Restaurant Satisfaction Survey conducted by the Consumer Reports National Research Center) tells you where to dine well for less. And try these eight ways to save when eating out. Get smart about eating out and check out how to keep from overeating when dining in restaurants.—Desiree Ferenczi

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Thinner wallet, thinner waistline? Has the bad economy been good for Americans’ waistlines? Healthier eating habits may be a welcome side effect of more frugal spending habits. Restaurant-goers have less to spend, so when they eat out they’re choosing less expensive places and finding better deals, skipping cocktails, and passing on dessert, according to recent surveys from Zagat on dining trends in Atlanta, Washington, DC/Baltimore, Chicago, and Texas.  In addition, Zagat says that diners in those cities expressed interest in healthier menu choices and are willing to pay more for “green” (locally sourced, organic, or sustainably raised) food.  Another upside to our down-turned economy: you may find it easier to get a table at that popular restaurant you’ve been hankering to try. Our CR Survey (Ratings, available to subscribers only, are based on 70,403 responses to the Restaurant Satisfaction Survey conducted by the Consumer Reports National Research Center) tells you where to dine well for less. And try these eight ways to save when eating out. Get smart about eating out and check out how to keep from overeating when dining in restaurants.—Desiree Ferenczi

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FTC issues rules to prevent debt relief abuse The Federal Trade Commission has announced new rules taking effect this fall to protect consumers who may be taken advantage of by companies advertising debt relief services that turn out to do more harm than good, a problem that occurs all too often, as we’ve reported. Starting on Oct. 27, for-profit companies that sell debt relief services over the phone may no longer charge a fee before they settle or reduce a customer’s credit card or other unsecured debt.  “This rule will stop companies who offer consumers false promises of reducing credit card debts by half or more in exchange for large, up-front fees. Too many of these companies pick the last dollar out of consumers’ pockets – and far from leaving them better off, push them deeper into debt, even bankruptcy,” said FTC Chairman Jon Leibowitz.       Under the new FTC rules, fees for debt relief services may not be collected until: The debt relief service successfully renegotiates, settles, reduces, or otherwise changes the terms of at least one of the consumer’s debts There is a written settlement agreement, debt management plan, or other agreement between the consumer and the creditor, and the consumer has agreed to it; and The consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider The FTC also is more tightly regulating telemarketing by debit relief companies,  with those new rules taking effect even sooner.  As of Sept. 27, the FTC will require debt relief companies to provide more disclosure to consumers,  prohibit companies from making misrepresentations and extend these protections to cover calls consumers make to these firms themselves in response to debt relief advertising.  Whether the new rules will cut down much on the current flood of debt relief TV and radio commercials or direct mail solicitations remains to be seen,  but at least companies will be under pressure to be a bit more honest about what they’re offering.—Andrea Rock

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FTC issues rules to prevent debt relief abuse The Federal Trade Commission has announced new rules taking effect this fall to protect consumers who may be taken advantage of by companies advertising debt relief services that turn out to do more harm than good, a problem that occurs all too often, as we’ve reported. Starting on Oct. 27, for-profit companies that sell debt relief services over the phone may no longer charge a fee before they settle or reduce a customer’s credit card or other unsecured debt.  “This rule will stop companies who offer consumers false promises of reducing credit card debts by half or more in exchange for large, up-front fees. Too many of these companies pick the last dollar out of consumers’ pockets – and far from leaving them better off, push them deeper into debt, even bankruptcy,” said FTC Chairman Jon Leibowitz.       Under the new FTC rules, fees for debt relief services may not be collected until: The debt relief service successfully renegotiates, settles, reduces, or otherwise changes the terms of at least one of the consumer’s debts There is a written settlement agreement, debt management plan, or other agreement between the consumer and the creditor, and the consumer has agreed to it; and The consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider The FTC also is more tightly regulating telemarketing by debit relief companies,  with those new rules taking effect even sooner.  As of Sept. 27, the FTC will require debt relief companies to provide more disclosure to consumers,  prohibit companies from making misrepresentations and extend these protections to cover calls consumers make to these firms themselves in response to debt relief advertising.  Whether the new rules will cut down much on the current flood of debt relief TV and radio commercials or direct mail solicitations remains to be seen,  but at least companies will be under pressure to be a bit more honest about what they’re offering.—Andrea Rock

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Filed under: Tax, Celebs & Money, In the News

According to our partners at TMZ, Rush Hour actor and comedian Chris Tucker owes the IRS $11 million in back taxes. TMZ leaked documents filed on Tuesday with the Los Angeles County Recorder's Office which shows that Tucker underpaid his Federal taxes in five separate years.

Here's a simple breakdown of Chris Tucker's debt:

• 2001: Tucker owes more than $4 million (even though he cashed in $20 million from Rush Hour 2 alone)
• 2002: more than $5 million
• 2004: $55,544.84 (an improvement, nonetheless)
• 2005: $660,000
• 2006: $1.78 million

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Senate Republicans blocked a bill to increase small business lending Thursday, dealing a setback to President Barack Obama's jobs agenda.

This article is by staff writer Adam Baker. Baker previous featured an article on his own blog entitled “How I paid off $15,000 in 9 months by selling my Stuff on Ebay“.

There I was, bustling around the kitchen making lunch for my daughter when our late morning routine was interrupted:Boom! Boom! Boom!

Milligan and I glanced toward the front door where the thunderous pounding had originated. “Holy cow!” I thought to myself, “There are only two groups of people who knock like that! This may not be good…”

Luckily, as I slowly opened the door, there was a stocky little lady in her late forties or fifties (with no badge). “Afternoon,” she said. “I’ve some packages for you… several packages for you. I’m gonna need some help carrying these around to the door.”

I started to tell her she must have the wrong house before I caught myself. “Whoa, that was fast”, I thought. Only 48 hours earlier, I’d been sitting in front of my computer cautiously ordering over 300 boxes of various sizes from United States Postal Office.

Free Boxes from USPS
For a while now, I’ve be aware the postal service provides free boxes when you ship through its Priority or Express Mail. Back when Courtney and I were purging all of our possessions in preparation for the year we spent traveling abroad, we had even stopped by our local post office to pick up several dozen of them.

But I recently discovered that the USPS will actually ship the boxes to you…for free! In fact, it’s painfully easy. Currently, there seems to be two different ways to order free boxes:

• The USPS Online Store. If you’re willing to take 30 seconds to register an account on usps.com, you can order directly from the post service. This gives you access to dozens of different box and envelope sizes. The website quotes you 7-10 business days, but my huge order only took 48 hours! Here’s the direct link to access the Priority Mail section of the USPS Online Store.

• USPS-eBay Partner Website. Alternatively, you can order free boxes with only your eBay account (no separate account needed with USPS). These boxes are also only for Priority Mail, but are branded with both the USPS logo and eBay’s logo. Unfortunately, you can only order 6 different sizes with your eBay account, but there is a decent variety offered. For more information, check out the eBay Supplies partnership on USPS.com.

When you order online, you can select between a pack of 10 boxes or a pack of 25 for each different box size. You can also order between 10 and 100 envelopes in a single batch. I personally ordered an assortment of 25-packs from each site and received them all within two business days! Now I’ve just got to get through all these boxes!

The Catch?
While the boxes are really 100% free, you can only use the free Priority Mail boxes for… Priority Mail. USPS is very strict on this rule. You won’t be able to use the boxes to ship Media Mail, First-Class, or Parcel Post. However, if in a fit of frugality you decide to use the boxes to wrap Christmas presents, you should be okay as long as no family members are undercover USPS agents!

Priority Mail is the default shipping method for many people who buy and sell on eBay. Packages normally arrive inside the 2-3 day quoted time frame, and the delivery confirmation and tracking (both free when ordering postage online) are important to a smooth transaction.

Whenever Courtney and I ship packages, whether it be through eBay or for family/friends, we almost always send them Priority Mail. So for us, we’ll eventually weed through our new shipment of free boxes!

Avoid the Post Office Altogether!
If you’re shipping a package via Priority Mail, the ability to order free boxes online means you can avoid the post office altogether! You could order the boxes, pack the item at home, print postage online, and even schedule a pickup for your outgoing shipment. That’s right: USPS will come pick up deliveries that contain at least one package that is Priority or Express Mail.

I have to admit that being at the post office isn’t one of my favorite pastimes. Courtney and I will continue to sell our unneeded stuff on eBay (we also sell stuff for our extended family); the process will just no longer include any trips to the post office. Being able to go through the entire shipping process from our home office is much simpler for us!

Oh — and if you know anyone in the Indianapolis area who could use some free boxes, let me know. I have a couple extra laying around!

Photo by Courtney Baker.

---
Related Articles at Get Rich Slowly:

• Cheap Moving Boxes
• How to Use the Amazon Marketplace for Fun and Profit
• What To Do About Stolen Mail?
• How to List an eBay Auction for Maximum Profit
• How to Get (Nearly) Free Stuff from eBay

(SliceOfNYC)

The banking industry, long accused of consumer abuse, now finds itself in the cross-hairs of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Signed into law by President Obama on July 21, the Act takes aim at a number of long-standing bank practices that many deem harmful to consumers.

The biggest change sanctioned by the reform is the new Consumer Financial Protection Bureau, an open-ended regulatory agency which, the Wall Street Journal says, will have “rule-making and some enforcement power” over banks and credit unions. Mortgage lending, specifically, figures to be an area of interest for the new agency.

Here are some ways that banks have historically preyed on their customers – and which the Consumer Financial Protection Bureau is likely to confront:

Subprime Lending

Many allege that subprime lending, in and of itself, constitutes an abuse of consumers by banks. Suprime loans are made to borrowers who are deemed a higher credit risk (i.e. they have low credit scores). These loans are considerably more expensive than “prime” loans made to borrowers with high credit scores, whether it’s because of higher interest rates, more fees, or both. During the housing boom, subprime lending flourished, with many borrowers receiving loans with low teaser rates that quickly ballooned to double digits, along with terms, like interest-only payments, that pretty much made it impossible for the borrower to make a dent in that debt.

In his book The Housing Boom And Bust, economist Thomas Sowell found that subprime loans rose from 7% of all mortgage loans to 19% from 2001-2006. Other “non-traditional” loans rose from less than 3% of all mortgage loans to nearly 14% during the same period.

Lending Without Income or Credit Verification

(CarbonNYC)

Another criticized bank tactic of the last decade involves making loans (both subprime and prime) without doing the appropriate income and/or credit checks. These loans are commonly known as no-doc loans or, in industry jargon, “liar loans.”  That nickname speaks for itself: many consumers deliberately lied on their loan applications (or were told to lie by their mortgage broker), misrepresenting their job status or income in order to seem like suitable borrowers. In other instances, lenders knew full well that unsophisticated borrowers were unlikely to repay loans and simply made them anyway in order to collect commissions.

The new law requires that banks and credit unions verify that borrowers are truly capable of repaying any mortgage loans they agree to sign.

Higher Prices Due to Debit Card Fees

(DeclanTM)

A May 28 New York Times editorial focused on the fees that retailers are required to pay Visa and MasterCard on debit transactions. So-called interchange fees, which are sometimes as high as 3% of a purchase, are set by card companies. Nearly 80% of the fees end up in the hands of banks, which “induced the banks to issue more cards.” In 2009, businesses paid an estimated $20 billion in debit transactions to Visa and MasterCard. Many argue that merchants – particularly small businesses – pass along those additional costs to consumers in the form of higher prices.

An earlier version of the financial reform bill included price controls on how high these fees could rise. The amendment would have required the Federal Reserve to set fees at “reasonable and proportional” levels, with the intent of saving small businesses “billions of dollars a year” and, hopefully, reducing prices paid by consumers. The amendment, however, didn’t make it into the final version of the bill.

Hiking Other Fees to Offset Regulation

(betsssssy)

Banks have already begun responding to tighter regulations (which limit their profits and ultimately increase their costs of doing business) by introducing new fees or increasing existing ones. On June 27, Reuters quoted Senator Charles Schumer saying there was a “trend across the banking industry” involving the elimination of free checking accounts. Now that banks can no longer enforce overdraft fees by default, other streams of revenue are being sought.

According to a statement issued by Schumer, “this is a radical departure from what customers are used to and it is coming too fast for them to even realize what hit them.” Schumer also wrote a letter to Federal Reserve Chairman Ben Bernanke in which he requested that the Fed pay “special attention” to banks during this transitional period, and ensure that customers have “ample time” to prepare for new fees.

Difficulty Switching Banks

(Omar Omar)

It has also become increasingly difficult for consumers to switch banks once they become dissatisfied with their current one. In a Red Tape report, MSNBC discussed “the pain and suffering consumers must face when trying to leave one bank to join another.” Citing a Federal Reserve study on switching costs, MSNBC reported Fed senior economist Timothy Hannan’s conclusion that it was “incredibly difficult” for consumers to get the facts about the costs of switching. 

The Fed also found that banks employed a “bargains-then-rip-off” strategy, offering teaser rates and other enticements early on before uncorking overdraft fees and other penalties once they lock a customer into an account.

What is more, once a customer is “locked in,” it is becoming increasingly difficult to get out. Because of features like direct deposit, automated online bill payments and automatic savings plan deductions, dumping your bank has become so much of a hassle, that many consumers end up putting up with fees even though they could avoid them if they opened an account elsewhere.

Filed under: Tax

Congressional leaders have been battling over the soon-to-expire Bush tax cuts for more than a year. Yet, there's still no word on whether Congress will vote to extend the cuts, allow the cuts to expire or work out some compromise package that might do a little of both.

At the center of the tax cut debate, is one key problem facing the current economy: Tax revenues are decreasing. With less income available to tax thanks to record levels of unemployed workers, there are only two ways to increase tax revenues -- increase the taxpayer base or raise taxes for the existing taxpayer base.

Raising tax rates is unpopular and unlikely to happen in an important election year and expanding the tax base would be just as unwelcome. That's because an astonishing number of taxpayers currently pay no federal income tax at all. Earlier this year, the Tax Policy Center reported that nearly half -- 45% -- of all households paid no federal income tax for the 2009 tax year.

Continue reading How almost half of all taxpayers pay nothing in federal income tax

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The Government has come under attack from business groups after announcing plans to phase out the so-called default retirement age of 65 by October next year.