Present policies and methods regarding the long-term adjustment of benefits

If beneficiaries are to maintain their standard of living at a level close to what it was before they left the workforce, the payments they receive under the Social Security program must be periodically adjusted to account for changes in the cost of living. This article describes the policies and practices employed by the Social Security Administration to accomplish this objective. It describes the historical development of various automatic-adjustment provisions, how contributions are indexed to determine the initial benefit, and how the purchasing power of the benefit is adjusted as the result of changes in the Consumer Price Index. Other factors that will affect long-term benefits, such as changes in the normal retirement age and in the size of the delayed retirement credit, are also explored.