(Mike Larson, editor of the Smart Money Report and the Interest Rate Speculator service, is away today. Mark Najarian, managing editor of Money and Markets, is filling in)

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Disappointing news arrived for Americans who rely on Social Security to enjoy their retirement years. The government confirmed what many had expected – recipients will receive no cost-of-living adjustment to benefits in 2016, becoming only the third time in 40 years that payments have been frozen.

The lack of inflation is blamed. The consumer price index upon which the adjustment is annually based registered flat or lower prices for the year. Is that fair? I think I can guess the response of most older Americans. In fact, the result has many people calling for a change in the formula.

For anyone who has gone shopping, visited a doctor, done home repair, bought a car, etc., the price of just about everything, except one item – gasoline – has clearly risen. It also doesn’t take into account regional variations. (For instance, the Fort Lauderdale Sun-Sentinel reports that costs here in the Money and Markets home area of South Florida have increased 1.3% since August 2014. Housing is up 3.3%, food and beverage costs up 2.2% and health care is 6.1% higher.)

Seniors receiving Social Security benefits will not be getting a raise this year.

About 64 million Americans receive either standard Social Security benefits or Supplemental Social Security (for the poor or disabled). According to the Wall Street Journal, the average payment is $1,224 a month. While retirees are not supposed to rely solely on Social Security and would ideally have pensions, savings and investments to help out, the WSJ cites estimates that 26 million additional people would’ve fallen below the official poverty line last year without the monthly payments.

There are calls for reform from both sides of the political spectrum. On the left, many want taxes and benefits increased going forward. On the right, some politicians consider Social Security an entitlement and are looking to revamp how it’s all considered.

The Social Security Administration itself admits that there’s not enough money in the system to last forever. “Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 77 cents for each dollar of scheduled benefits,” the administration estimates on its website. (For those who haven’t already done so, you should go to www.ssa.gov and register online. You will be able to check your earnings history and get an estimate on how much you will get when you decide to take benefits, either at age 62 or later.) Here’s a link from U.S. News & World Report explaining more about Social Security benefits for 2016.

There is some good news in the lack of a raise in benefits. Medicare Part B premiums for many people will rise 52%. But because of the “hold harmless” provision in the law, those receiving Social Security benefits cannot be forced to pay higher for premiums if their benefits do not receive a cost-of-living increase. (Here’s a link to a New York Times article on the matter.)

“There are calls for reform from both sides of the political spectrum.”

Nevertheless, this all leads up to fact that Americans need to save more and invest smartly if they want a stress-free retirement, at least on financial matters, and not rely on Social Security benefits.

This also allows for Money and Markets readers to exchange views on Social Security, maybe share hints and experiences related to retirement finances. Some comments are already in (see below). How do you feel? Should taxes be raised to keep Social Security healthy in the future? Is it in need of reform? What else can be done? Do you rely on the benefits, or are they just something to supplement other income? If you’re young, do you have faith in future Social Security benefits? Click here to add your comment.

Our Readers Respond

Mike will be back Monday to read through your responses from this week and any comments you have on Social Security. In the meantime, here are a couple of comments that have already arrived about Social Security:

Reader Eagle495 isn’t happy with the Republicans: “You do know that it is the Republicans in Congress that want to increase the fees for Medicare and increase the Deductibles, don’t you? They also want to gut Social Security… Gee remember when the tax rates for the Ultra Wealthy were really high and we paid our bills and had a small deficit? It was just before Reagan was elected and the Republican Revolution began.”

Reader Jim saw it another way: “Reagan’s ‘revolution’ caused total Federal revenues to soar upward. The Democrat Congress managed to spend it all and then some.”

Now’s your chance: You can go to the website and add your comments by using this link.

Other Developments of the Day

● Speaking of government-related programs, the Obama administration is forecasting only a small rise in the number of Americans receiving health insurance through the Affordable Care Act. Observers say it indicates that fewer-than-expected young people are signing up through the program. When the plan was created, most experts said that attracting healthy young people (and their premiums) would be key to offsetting costs related to older people who likely would need more care. The Health and Human Services agency estimated that 10 million Americans will be covered by late 2016 through health plans purchased on the federal and state insurance exchanges under so-called ObamaCare.

● Emergency crews were busy shoveling mud from a stretch of Interstate 5 north of Los Angeles after floods washed debris onto the major freeway, stranding hundreds of vehicles and forcing some motorists to wait for help atop their cars. So far, there are no reports of deaths or injuries. Officials say they expect the freeway to be reopened by this afternoon California time.

● My team’s not in the baseball postseason this year, so it’s not as exciting as it was three of the past five years (can you guess my team?) But the National League Championship Series is set for a dream matchup for the TV networks. The Mets beat the dreaded Dodgers to advance to NLCS to face the Cubs, who earlier beat the Cards. If the Cubs get to the World Series, and win it, it will be their first championship in 107 years.

Remember you can join the conversation by clicking here and adding your comments on Social Security, ObamaCare, the Cubs or anything else.

Best wishes,

Mark

(Mike Larson will return Monday.)