We derive the spectral efficiency of narrow-band fading channels when channel estimation and transmitter feedback are used. We also determine an optimal policy for fading channels that achieves the maximum spectral effficiency by adapting the transmit power, data rate, and coding scheme. This is in contrast to a common policy which adapts only the transmit power to maintain a constant received SNR. Such constant power policies need to allocate most of their average power to compensate deep fades, thereby significantly reducing their spectral efficiency. We therefore propose a modified constant power policy which maintains a constant SNR at the receiver only when the fade level is above an optimized threshold level. Although the modified policy is relatively simple, it performs very close to the optimal policy. We also analyze the spectral efficiency of uncoded M-QAM for adjustable and constant rate/power policies, and determine the maximum possible coding gain for M-QAM. Interference effects and frequency reuse are not considered in this study; we deal with the spectral efficiency of a single user.