In order to put the CPI-bias issue in perspective, we describe briefly the role of indexation
in the Social Security program. Four time periods are relevant to this topic: 1979 to present,
1973 to 1978, 1968 to 1972, and pre-1968. The distinction between initial retirement and postretirement
benefits is also important. Across all time periods, the computation of Social
Security benefits at initial entitlement comprises three fundamental steps: (i) determining the
average monthly earnings in covered employment, (ii) calculation of the benefit (referred to as
the primary insurance amount or PIA) by applying a progressive rate formula to the average
earnings, and (iii) adjusting the PIA for early or delayed retirement and spousal benefits.