On this week’s episode of Tape Talk, we consider the recent headlines about Social Security. Is this program, that millions of Americans rely on, in jeopardy or is the news just static?


Before we get into the meat and potatoes of this week’s show we start off with some of the week’s biggest headlines!

Twitter (TWTR) is in the news this week after the stock extended its recent rally with the news that it would be replacing Monsanto in the S&P 500 Index. We look beyond the price action and consider what this means for investors. For instance, this may be a prime example of the index momentum factor. Every S&P index investor who may have never owned Twitter in the past will now own this company that was already up 60% year to date before the news. And, as more money goes into index funds more shares will be bought thus providing additional demand for the stock that might not have been there otherwise. This doesn’t mean it has to go higher forever but simply a good example of the effects of index investing on the wider market.

AT&T (T) was downgraded this week on continued concerns of cable cutting affecting its entertainment subscription business. While this is not new news it did send the stock lower initially before later recovering. We’ll take a look at the recent move lower in the stock and consider what this might mean for investors, especially the dividend investors typically attracted to this telecom stock. Is there an opportunity here to buy a decent yield at a good price or is this a dividend trap that investors should avoid?

How Social Security Works

With the news out this week that social┬ásecurity is going to dip into its trust fund reserves for the first time in decades, it may be a good idea to get on the same page of how this program works for the wide population of Americans who depend on it. For instance, while many know that they fund the program through their paychecks, few know where this money goes or how it’s invested once it gets there. Furthermore, we need to explore what the potential headwinds for this type of program might be before we can discuss some potential solutions going forward.

What Does This Mean To You?

It’s no secret that social security has had some issues coming down the road for some time now. In fact, it’s often a hot topic around Washington and Congress that something must be done yet little ever happens. This is why we’ll take some time to review some of the key issues surrounding this social program and how they might be resolved.

Think you have the solution for fixing the social security program? Check out this neat tool by the CRFB to see how your ideas might play out. Social Security Reform Simulator

The Importance of Planning

Most people know that retirement planning is a moving target but they may assume some aspects of their retirement are set in stone. As we consider that social security is a large portion of income for many retirement plans while at the same time the program requires fixes to be sustainable, it becomes clear that it may be time to take this aspect of your financial plan more seriously. If you haven’t yet, it may be time to start developing your financial plan and laying the roadmap for your retirement. The sooner you start the more you can adjust as needed before you hit your target. To take the first steps, find out more HERE.

Employees and clients of Joule Financial own investments in Twitter and/or AT&T.