Here is how Social Security works. During your working years, you pay Social Security taxes on your earnings. These taxes are placed into the Social Security trust funds and used to pay benefits to current beneficiaries. When you retire, your benefits will be paid by the taxes collected from current workers. Your benefit amount is directly related to how much money you paid into the system and the age at which you started receiving your benefits. Since benefits are paid for life, they work similarly to an annuity. The earlier you start your payments, the lower the monthly amount will be. Similarly, waiting until later in life to start your benefits will result in a higher monthly amount. Even after you die, your surviving spouse might be entitled to survivor benefits. These benefits can be as much as 100% of the deceased spouse’s benefit amount.