When our nation's Social Security program was enacted in 1935, there was no automatic adjustment in Social Security retirement benefits to account for inflation. Rather, Congress would periodically adjust benefits to reflect inflationary increases in the costs of goods and services. In 1972, however, Congress enacted an amendment to the Social Security Act that requires benefits to be increased based on the increase in the Consumer Price Index (CPI) the previous year.
A recent issue brief prepared by the Pew Charitable Trusts (Pew) reports that most state pension plans are significantly underfunded and that, for many, the funding gap is growing. [See "The State Pension Funding Gap: 2016. Investment shortfalls, insufficient contributions reduced funded levels for public worker retirement plans (Pew, April 12, 2018)]. Pew, founded in 1948, is an independent non-profit organization that strives to inform the public and improve public policy by providing useful data and analysis to illuminate issues and trends that shape our world.