How does Social Security work?
The Social Security system works by using money from today's workers to pay retirement benefits to today's retirees. Click on Step 1, 2 or 3 in the upper right-hand corner of the interactive to read about each step of the program.

How much does the Social Security Administration pay to beneficiaries each year?
The Social Security Administration expects to pay almost 48 million Americans roughly $509 billion in Social Security benefits in 2005.

Why was Social Security created?
With many Americans left in financial ruin from the Great Depression, President Franklin Roosevelt signed the Social Security Act on Aug. 14, 1935 as part of the New Deal. Passage of this act established retired workers pension, unemployment insurance and welfare benefits for dependent children and people with disabilities. Taxes were collected for the first time in January 1937 and regular ongoing monthly benefits began in January 1940. Click here to see the Social Security Administration's history page.

What are the Social Security trust funds?
The Federal Insurance Contributions Act, or FICA, is the collection of taxes to pay for Social Security and Medicare. FICA was originally part of the Social Security Act, but the taxing provisions of the law were reassigned to the Internal Revenue Code. The system is described as "pay-as-you-go," meaning that payments made by current workers are used to fund benefits for current retirees.

Surplus taxes go into the Social Security Trust Fund, maintained by the U.S. Treasury in the two separate accounts, the Old-Age and Survivors Insurance Trust Fund and Disability Insurance Trust Fund. In 1983, Congress made changes to the Social Security Act so that Social Security was taking in more than it was paying out, thus creating the trust funds. The changes included increasing employer and employee contributions to Social Security from 5.4 percent to 6.2 percent, raising the age at which retired workers could receive full benefits from 65 to 67 (for workers born in 1960 or later), and delaying some scheduled payments for six months, thus cutting spending.

The surplus is held in the Social Security Trust Fund, which is secured in the form of U.S. Treasury bonds. The Social Security Administration Trustees Report predicts Social Security will begin to run a negative cash flow beginning in 2018 due to the aging population. It estimates that Trust Fund bonds will be able to cover the deficits until 2042.

How does Medicare fit into the picture?
Medicare, enacted in 1965, is the second-largest benefit program after Social Security. Medicare provides health insurance coverage to the elderly and people with disabilities. Most beneficiaries receive both Medicare and Social Security. The funds for Medicare also come from FICA taxes.

In 2005, Medicare will spend about $240 billion on health care for 40 million beneficiaries. Medicare's two programs, Hospital Insurance and Supplementary Medical Insurance pay for costs associated with medical treatment. The HI part of the program is financed largely by a payroll tax levied on workers and their employers. The SMI part of the program is financed in two ways: monthly premiums paid by enrollees and general government revenues.

Do Social Security numbers mean anything?
The first three digits of a Social Security number are geographically assigned, east to west. The remaining six numbers are randomly assigned. No two Social Security numbers are ever the same to prevent fraud and identity theft. Since the program's inception in 1936, 415 million different numbers have been issued.

What are the differences between the Social Security Administration's Disability Insurance and the Supplemental Security Income program?
The Supplemental Security Income program is a federal assistance program funded by general tax revenue for the elderly, blind or disabled who are considered by the government to be low-income. Disability Insurance uses funds from Social Security to supplement incomes of those who are disabled and unable to work. SSI uses financial need to determine beneficiaries, while Disability Insurance is determined by prior work under Social Security. In the two programs, disability is determined by the same medical requirements for most people.

Can beneficiaries work and receive benefits at the same time?
A person can receive retirement or disability benefits and work; the employer and employee are still subject to Social Security and Medicare payments. If the beneficiary is self-employed, 12.4 percent of the salary is withheld for Social Security and Medicare payments.

How many people live on Social Security benefits alone?
For approximately 22 percent of people 65 and older, Social Security is their only source of income.

-- Compiled by Sheryl Silverman and Caitlin Thompson for the Online NewsHour