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Why Social Security Is Rising Only $17 Next Year

NEW YORK ( TheStreet) -- Throughout the government shutdown, the Social Security Administration has continued paying out retirement and disability payments.

But as Congress reaches a deal on the debt ceiling, for U.S. retirees and Americans on disability the next big deadline is when the Social Security Administration announces its cost of living index payment change for 2014.

Analysis on the rate change from The Associated Press shows that, like this year's hike of 1.7%, the coming payment rise will be at historically low. In fact, the payment hike is expected to be the smallest increase since the SSA began instituting automatic cost of living adjustments in 1975: 1.5%.

The rate won't be formally announced until the Labor Department weighs in on inflation for September. The report should have come out Wednesday, but the government shutdown caused a delay.

What's behind the minuscule increase, which would bump up the average Social Security payment by only $17 for the entire year?

Since 1975, the average COLA rate hike has clocked in at 4.1%, and there have been significant bumps in past years -- including 1975, when the SSA bumped up payments by 8%; and 1990, when COLA rates rose by 4.7%; and 2009, when payment escalated by 5.8%.

But as the Labor Department report attests, the COLA index is tied tightly to the inflation rate via the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W. The higher the CPI-W rate, the higher the COLA hike.

And this year, the average prices for common commodities such as food, clothing and energy will rise by only a combined 1.4% -- with the theory being that the $17 will cover it.

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