by 
The Curious Bag
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Just about anyone who earns a salary pays into the Social Security retirement plan. How much a person pays into this program determines the majority of her retirement benefits, but an individual's choices also have an impact.
Identification
The Social Security Administration calculates a person's Social Security benefits using a formula based on his top 35 earning years and the age at which the person retires.
Early Retirement
A person who elects to receive Social Security payments before full retirement age (65 as of 2010) receives a 0.5 reduction in benefits over her lifetime for each month she retires early.
Figuring It Out
The Social Security Administration automatically sends out an earnings statement each year to people over the age of 25. An individual may request a statement at any time using form SSA-7004, which also is available online. Additionally, the Social Security Administration offers an online estimation tool based on a retirement age of 65.
Tips
As soon as a person turns 62, Social Security adds cost of living increases to her benefits, even if the person has yet to retire. Retiring at 65 or working until 70 maximizes benefits.
Fun Fact
In November 2009, the average Social Security beneficiary received about $1,063.90 per month.
Source:
Social Security Administration; Monthly Statistical Snapshot, November 2009
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