Social Security Online Statement of Benefits

Social Security StatementWhen making any financial decision it’s always useful to have as much information as possible. There’s no time when this is more important than deciding whether you have the ability to retire or not. In its surveys, AARP has found that many people nearing retirement don’t understand social security benefits and how to determine the optimal time to claim them.

The best way to start by educating yourself about social security and its impacts on you is to review your Social Security Statement. In the past, these were statements mailed each year to people over 25. Now, the Social Security Administration has made these statements available online. The release of Social Security online statements aims to help people plan their benefits better by offering access to the statement with ease. To obtain your online statement, head over to

In order to sign up you must:
– have a valid email address,
– have a Social Security Number,
– have a U.S. mailing address, and
– be at least 18 years of age.
– Answer personal questions to prove your identity

The website will prompt you to set up an online account with username and password for easy future access.

The statement itself is pretty basic, with two main ingredients. The Benefits section gives a breakdown of everything that you’ve contributed during your lifetime. It will also inform you of the benefits you’re eligible. The Earnings section will show the income that you’ve earned each year during your lifetime, which is pretty cool to see. Hopefully you’ve experience an upward trend over your lifetime.

That’s really all there is to the statement at this point. As I said, it’s pretty basic. But if you’re nearing retirement, or you’re simply interested, then this is a valuable piece of your financial planning.

(Image courtesy of 401k on Flickr)

Facebook IPO: Investment or Hype?

If you follow the market at all, then you know that the Facebook IPO is today. Originally set to open between $28 and $35, Facebook (Ticker: FB) will actually open by selling 421 million shares at $38 per share. This means that Facebook will be raising a total of $16 billion and will give it a total value of over $100 billion since it’s not selling all of its shares. In comparison, when Google has its IPO in 2004, it only raised $1.67 billion.

Because Facebook is integrated into so many of our lives, it’s easy to see why there would be a lot of hype amongst investors. That fact, coupled with the normal frenzy that can accompany a “hot” tech IPO, and I suspect there’s danger lurking around the corner. Zynga and Groupon, both of which went Facebook IPO Like Buttonpublic last year, are trading below their initial share prices. Facebook will also be debuting at a steep PE ratio (price-to-earning ratio) of 100. That definitely puts it at the top of the heap, which means it will require large growth to achieve the profits that are expected of it. However, this doesn’t necessarily mean it’s priced too high. Amazon has a $100B market cap also, and it trades at a P/E of 179.

If you remember IPOs of the late 1990s and early 2000s, then you’ll probably recognize that this IPO isn’t following the same hype-generating recipe. During these IPOs, companies underpriced initial offerings to build hype and see a significant “pop” in their share price. But this isn’t just an old play. Zillow popped by 79% and LinkedIn by 109%.

While I don’t give investment advice, I don’t think this is an IPO where you’re going to see a significant pop. However, if you do decide to buy today, and you do see a significant pop, I’d definitely consider selling and locking in those gains. If you want some non-investment perspective on the IPO, check out Forbes’ 10 reflections on Facebook’s IPO.

S&P 500 Breaks Even Since Peak

Did you happen to be in 100% cash and then decide to invest all of your money in the stock market on October 9, 2007? Unlikely. The S&P 500 closed at its highest point ever on October 9, 2007, at $1,565.15. During the dot-com boom the S&P 500’s peak close was $1,500.64. However, even if you invested all of your money into the S&P 500 on October 9, 2007, at the absolute peak, you’d have more money today than you originally invested.

On April 2, 2012, the S&P 500 closed at $1,419. That’s up 12.8% this year, and about 10.2% from its all-time high. But it’s still down from it’s peak, right? Well, the S&P 500 simply tracks price changes and doesn’t incorporate reinvested dividends. To get the true return of the S&P 500 you have to look at the S&P 500 Total Return Index, which includes reinvested dividends. On Monday, the S&P 500 Total Return Index closed at $2,449. On October 9, 2007, the index closed at $2,447. Obviously it’s not a big gain, but S&P 500 hasn’t done as made as the average person is led to believe.

S&P 500 Total Return Index Peak 2012

For those who tend to focus on the price of stocks, I think this illustrates the great impact that dividends can have on returns. During the dot-com boom, interest in dividends fell and were considered to be one of those “old metrics” that was no longer valuable. With high-flying companies such as Apple recently announcing dividends, I think it’s safe to say that dividends are coming back into flavor.

(Note: Graph above courtesy of Bloomberg)