Prepayment?

If you have 30 or 15 years fix mortgage, should you try to pay it off faster?

 According to this article, it pays to NOT prepay.

Why do so many people choose to put extra money into a mortgage when other options would likely increase their wealth? “This is really remnant of Depression mentality that has persisted from generation to generation,” says Amromin. At the time, most mortgages had one- to five-year terms, with a lump sum payment due at the end.

How Much Does Retirement Cost?

I want to retire when I am 55, assuming I’ll live till I am 90 and still maintain the same lifestyle as now, according to this retirement calculator, I need ~4.2 Millions to retire at 55. If I want to retire now, I need ~2.3 Millions.

Unless someone wants to give me 2.3 mil, the 4.2 mil seem to be a goal I can work toward. Assuming annual raise of 4% and annual average return of 14% (higher than average) during working year and 8% return during retirement, I would need to contribute ~16% of my income to retirement.

Seem a bit far reach but still doable.

Are You Paying Too Much Social Security Tax?

I just did my tax and totally overlooked the significance of social security tax until I read about it in San Diego Tribune’s Sunday paper.  In 2006, the maximum social security tax (FICA) the government could be collecting is $5,840.40. For 2007, maximum FICA would be $6,045.

Luckily, my 2006 tax situation was very simple so I didn’t overpay (not sure about 2005 though. Is it too late to reclaim?).

Did you overpay? If so, here’s an article on how to recover excess payment.