Will working affect my Social Security payments?

It depends on when you retire. The Social Security Administration determines your so-called "full retirement age," which is somewhere between 65 and 67 depending on when you were born. (Your Social Security annual statement includes your lucky date. Visit the ssa.gov Web site for more details.)

If you take early Social Security benefits (anytime between age 62 and your full retirement age), each dollar of income you earn above $13,560 each year will reduce your Social Security payout by 50 cents.

The rules are more lenient starting in the year in which you reach full retirement age. For example, if you already are drawing Social Security benefits and you hit full retirement age in 2008, you could pocket $36,120 in earnings without any reduction in your Social Security benefit. If you happen to earn more than $36,120 in your big transition year, your benefit will be reduced by $1 for every $3 in earnings above the $36,120 threshold.

Now the good news: Once you have passed full retirement age you can earn as much as you want with no impact on your Social Security payout.