Social Security: Is Early Retirement the Way to Go?

Social Security is perhaps one of the most interesting results of the New Deal during the great depression. Some believe that its nothing more than a very bad retirement savings program, whereas others believe that it's a safety net to keep seniors from living in poverty. Regardless about how you feel about it, you will have to pay into it whether you like it or not, and you will get money out upon retirement. Social Security is essentially a system which redistributes wealth from those who are workers to those who are retired. The Social Security Administration takes 11.2% of your income and places it in the Social Security Trust fund and then when you reach age 62 or age 67, you can retire and receive monthly payments from the Social Security Administration. Social Security also provides a disability benefit and a death benefit.

Social Security is really not a very good deal for most people mathematically. People should focus on making it the best deal they can though. Retirees have the option of taking their money at age 62 or age 67. If you take it early at age 62, you will start getting paid immediately, but have a reduced benefit for the rest of your life. If you take the full retirement at age 67, you will receive a higher payment.

Before making a decision as to whether you should take early retirement or not, we have to make sure we're taking early retirement for the right reasons. Never take out early retirement because you absolutely need the money. If this is the case, your lower social security payment is going to haunt you for the rest of your life and you will be forced to live on next to nothing until your death. Take the time, and work for an extra five years, it's not going to kill you. This way you won't have to eat beans and rice throughout all of your retirement.

Assuming your finances are in order, now we can determine whether or not it makes sense to take early retirement or not. The Social Security website offers a calculator which will help you determine which option is best. There is really only one factor to determine whether or not if it's the best option. How long do you think you are going to live? Let's say we assume we are going to live until 82, and can receive a Social Security payment of $9000 at early retirement, or a payment of $1200 at age 67. We would receive a total of $360,000 at regular retirement and a $324,000 at early retirement. You will want to use the social security calculator or call a social security representative toll free at 1-800-772-1213, which will help you determine which is the best option for you based on your income and life expectancy.

Home-loan demand soars

U.S. mortgage applications skyrocketed during the first week of 2007 as interest rates fell for the first time in five weeks, lending support to the view that the housing market is stabilizing, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, jumped 16.6 percent to 671.1 for the week ended Jan. 5.

However, the monthly average shows a decline in the volume of applications for home loans, with the four-week moving average down 2 percent.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.13 percent, down 0.09 percentage point from the previous week. Interest rates were above year-ago levels of 6.08 percent.

The MBA's seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, soared 16.2 percent to 472.8, its highest since the week ended Jan. 20, 2006 when it reached 473.7. The index was also above its year-ago level of 457.4.

The group's seasonally adjusted index of refinancing applications surged 17.3 percent to 1,923.8. A year earlier the index stood at 1,497.5.

The refinance share of applications increased to 48.4 percent from 48.1 the previous week.

Fixed 15-year mortgage rates averaged 5.85 percent, down from 5.93 percent. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.79 percent from 5.84 percent.

The ARM share of activity decreased to 20.1 percent from 20.4 percent the previous week, its lowest since July 2003.

The MBA's survey covers about 50 percent of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.

Information About Investment Property

Any property that is purchased with the intent of gaining a return is considered investment property. Investment property can be an apartment building, a duplex, a single-family dwelling, vacant land, commercial property -- basically any type of real estate. The term investment property usually describes property that the owner does not occupy, but in some cases, the owner may occupy a portion of it.

Purchasing investment property can be a lucrative venture, whether one simply hopes to purchase a home or plans to make a business out of such investments. One strategy for beginners is to purchase an investment property such as a duplex, or other multiple family dwelling, and live in one unit while renting out the other(s). This way, monies collected from the renter or renters covers the note, leaving the owner without a mortgage payment. Eventually the property is paid off, and the purchaser continues collecting the rent for a profit.

The owner may also purchase another investment property, using the equity in the first property to finance the purchase. Equity simply means the fair market value of the property minus the amount still owed, including any liens. It is common to borrow against the equity in a property. Rates for such loans are fairly competitive because the property acts as collateral to secure the loan. The less risk there is in lending, the better the rates are.