After age twenty-five you should be receiving annual reports from the Social Security Administration telling you where you stand with your benefits. The form will show the projected monthly payout based on your earnings, assuming you work until normal retirement age. It also shows how the payments would increase if you delay a few years to begin receiving payments.

It is important to know that these payments do not automatically come to you. First, you have to submit an application to the Social Security Administration.

The following is a list of questions you will be asked.

• Your name, gender, and social security number

• Your name at birth, if different

• Date and place of birth (state or foreign country)

• Whether a public or religious record was made of your birth before age five

• Citizenship status

• Whether you or anyone else has ever filed for social security benefits, Medicare, or Supplemental Security Income on your behalf (if so, they will want to know on whose social security record you applied)

• Whether you have used any other social security number

• Whether you became unable to work because of illness, injuries, or conditions at any time within the past fourteen months. If “yes” they will want to know the date.

• Whether you were ever in the active military service before 1968 and, if so, the dates of service and whether you have ever been eligible to receive a monthly benefit from a military or federal civilian agency

• Whether you or your spouse have ever worked for the railroad industry

• Whether you have earned social security credits under another country's social security system

• Whether you qualified for or expect to receive a pension or annuity based on your employment with the federal government of the United States or one of its state or local subdivisions

• Whether you are currently married and, if so, your spouse's name, date of birth (or age), and social security number (if known)

• The dates and places of each of your marriages that have ended — and how and where they ended

• The names of any unmarried children under eighteen, age eighteen or nineteen and in secondary school, or disabled before age twenty-two

• The name(s) of your employer(s) and/or information about your self-employment and the amount of your earnings for this year, last year, and next year

• Whether you had earnings in all years since 1978

• Whether your employers can be contacted for wage information

• Whether you have any unsatisfied felony warrants for your arrest or unsatisfied federal or state warrants for your arrest for any violations of the conditions of your parole or probation

• The month you want your benefits to begin

• If you are within three months of age sixty-five, whether you want to enroll in Supplemental Medical Insurance (Part B of Medicare)

Based on your answers to these questions you may be asked for additional information.

Taxes on Social Security

If you decide to begin receiving your social security benefits while still working, they're going to come at a price. First, there is a sliding scale of decreased benefits based on how old you are. Remember, at present, you cannot begin to collect retirement benefits until age sixty-two, but if you are a widow or widower you can collect at age sixty. Next, the benefit deduction is based on how much you earn in a given year. This scale also slides. For 2005 it was $12,000 and 2006 $12,480. If you are still working and earn above these thresholds, your social security payments would be reduced by $1 for every $2 of benefits. In the year you reach full retirement age, you would sacrifice $1 for every $3 with a higher earnings threshold. In 2005 it was $31,800 and 2006 $33,240. In the month you reach full retirement age, you escape any further cuts. You will be eligible for full social security benefits regardless of your other wages.

What Social Security Taxes Are Based On

It may surprise you to learn that your social security benefits are not necessarily tax free. No one pays income tax on more than 85 percent of his or her social security benefits, and some pay less. Taxes are decided based upon your combined income, which is the sum of the following.

• Adjusted gross income on your 1040 tax return

• Nontaxable interest

• Half of your social security benefits

For an individual in 2006, 50 percent of social security benefits would be taxed if the combined income was between $25,000 and $34,000. For income over $34,000, 85 percent of social security benefits would be taxed. Comparable benchmarks for married couples filing jointly would be $32,000 to $44,000 and anything above $44,000. Other tax consequences, such as distributions from retirement funds, IRAs, Roths, etc., may need to be sorted out by a tax advisor.