The Social Security Administration announced Wednesday a 1.7percent cost-of-living adjustment that will affect the monthlybenefits of 58 million older Americans beginning next year.

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The COLA increase will amount to about $20 a month for thetypical Social Securityrecipient. The average monthly payment today is$1,192.

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Supplemental Security Income -- the disability program for thepoor -- will also increase by the same amount for another 8 millionbeneficiaries on Dec. 31. The increase is based on inflation,which is well below historical averages so far this year.

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Reaction to the announcement was tepid, at best.

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“This is the third consecutive year, and the fifth time in sixyears, that the increase will be less than 2 percentage points,”said David Cox, president of the American Federation of GovernmentEmployees, the largest federal employee union.

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“The costs for items that most seniors spend their money on –health care and groceries – are rising faster than the overallinflation rate. For instance, premiums for retirees and currentemployees in the federal health insurance program will rise 3.8percent next year,” Cox said.

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Also read: 10 least tax-friendly states for retirees

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Cox said that while some increase is better than none, forseniors, the annual increases “will be gone before most evenreceive them.”

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AARP CEO Jo Ann Jenkins called the COLA increase “modest” and a“partial protection against inflation.”

While overall inflation has been low, federal retirees face a 3.8percent increase in their health insurance premiums next year. Thatelicited a note of displeasure from the National Active and RetiredFederal Employees Association.

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"News of the cost-of-living adjustment for the coming yearalways is eagerly awaited by the countless Americans who rely onthe increase to keep up with the rising price of food, housing,transportation and medical care," Joseph A. Beaudoin, president ofthe organization, said. "However, despite the partial relief thisCOLA will provide, the announcement is a reminder that our methodfor calculating the increasing cost of goods and services is out ofsync with the reality faced by millions of federal (retirees),Social Security recipients and military retirees."

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The Social Security Administration also announced the maximumamount of earning subject to Social Security tax will increase to$118,500, from $117,000, due to increases in average wages,affecting about 10 million taxpayers next year. The tax amounts to12.4 percent of an individual’s earnings.

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Congress approved automatic increases for Social Securitybeneficiaries in 1975, when inflation was considerably higher.

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The cost of living in the U.S. barely rose in September, leavinginflation below the Federal Reserve’s goal as fuel prices plungethis month.

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The consumer-price index climbed 0.1 percent after decreasing0.2 percent in August, a Labor Department report released Wednesdayshowed. The median forecast of 84 economists surveyed by Bloombergcalled for no change. Excluding volatile food and fuel, theso-called core measure also advanced 0.1 percent after beinglittle-changed in August.

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A slowdown in global economic growth and declining energy andcommodity costs will restrain overall price pressures this month,indicating contained inflation will give Fed officials room to keepinterest rates low well into 2015. Lower fuel bills are alsohelping boost consumer confidence and purchasing power, which willunderpin the U.S. expansion.

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“There are very few price pressures throughout the economy,”said Gus Faucher, an economist at PNC Financial Services Group Inc.in Pittsburgh, who correctly projected last month’s CPI increase.“It’s generally positive for consumer spending.”

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Bloomberg News contributed to this report.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.