Purchasing power of U.S. Social Security benefits abroad, 1970-82

This article examines whether the small number of Social Security beneficiaries living abroad enjoy a higher standard of living than they would with the same benefits if they lived in the United States. The article addresses this question using two methods. First, absolute comparisons of U.S. dollar purchasing power abroad are made using "purchasing power parities," a method recently developed to allow international comparisons of real standards of living. Second, the effects of changes in Social Security benefit levels, exchange rates, and rates of inflation on the relative value of benefits abroad are measured. Both methods show considerable instability in purchasing power of Social Security benefits in the 1970's. Although beneficiaries in 1970 generally could live better abroad than in the United States, this advantage eroded considerably during the 1970's, followed by some improvement in 1981-82.