(MONEY Magazine) – Smart financial planning demands that you and your family understand how Social Security's retirement, survivor and disability systems work. But Americans have become increasingly confused about the intricacies and stability of the programs. The following questions and answers will help you sort through the tangle of Social Security rules. For more information, call your local Social Security Administration office or get a copy of the 1988 Guide to Social Security, published by William M. Mercer Meidinger Hansen Inc., an international employee-benefits consulting firm (1500 Meidinger Tower, Louisville, Ky. 40202; $3).

Q What kind of benefits can I get from Social Security? A The Social Security system consists of three funds that pay benefits. The Old-Age and Survivors Insurance Trust Fund provides monthly checks to retirees, their families and to families of deceased workers. The Disability Insurance Trust Fund pays benefits to disabled workers and their families. The Hospital Insurance Trust Fund pays Medicare claims.

Q Do I have to pay taxes into Social Security to receive benefits? A Almost everyone with earned income is required to pay Social Security taxes and will get benefits. Exceptions: most federal employees hired before Jan. 1, 1984; some employees of state and local governments; railroad workers; clergy members who choose not to participate; and some employees of foreign companies who work outside the U.S.

Q Do I owe Social Security payroll taxes on all of my earned income? A Not if you earn more than the cap subject to Social Security taxes -- $45,000 in 1988. That maximum taxable amount rises, however, in step with the average increase in U.S. wages nationally.

Q What's the most I can get from Social Security if I retire this year at age 65? A The largest benefit in 1988 is $10,056. If family members also receive benefits based on your earnings, the most your family can receive is $17,598. The biggest benefits go to people who have worked 35 years or longer, had the fewest job interruptions and consistently earned at least Social Security's annual earnings cap.

Q As a self-employed person, do I pay more in Social Security taxes than if I were salaried? Also, will my benefits be more generous? A Yes, you pay more; you kick in the employer's portion as well as the employee's. Despite that, your benefits will be the same as if you were salaried. This year, the self-employed pay a Social Security tax rate of 15.02% on as much as $45,000 of their earnings, but a special tax credit drops their effective tax rate to 13.02% -- still higher than the 7.51% rate for salaried people. The most a self-employed person would pay in Social Security taxes in 1988 is $5,859; for salaried people, it's $3,380.

Q How long must I work to qualify for Social Security retirement benefits? A You must work long enough and earn enough to accrue a specified number of ''quarters'' of Social Security coverage. Anyone 59 or younger this year must accumulate 40 quarters, which takes roughly 10 years. (People 60 to 65 need 34 to 39 quarters.) Social Security adds a quarter to your record every time your earnings reach a minimum level that rises annually with wage inflation. In 1988, you accrue a quarter of coverage per $470 of earnings, up to four quarters a year.

Q How does Social Security know when to start sending my checks? A Complete an application form from your local Social Security Administration office saying when to start your benefits. The agency will need proof of your age. Bring your W-2 forms for the past two years or, if you are self-employed, your federal income tax returns. If you are married, divorced or widowed, you must show your marriage certificate too. This can be done by mail, but your documents will be safer if you go in person to the Social Security office.

Q If I retire at age 50, can I get Social Security to start sending my checks then? A No. The earliest you can receive retirement benefits is the month after you turn 62. But by getting your checks before age 65, you will permanently reduce the size of your monthly benefit. Social Security cuts benefits by about one- half of 1% for each month before 65 that you receive the checks. So your benefits at 62 would be 80% of what they would have been if you had waited until 65.

Q Will I increase my benefit by waiting to receive my checks beyond age 65? A Yes, to a point. Your Social Security check will be fattened by 3% for each year you delay accepting benefits, up to age 70.

Q I'm 30, expecting a baby and planning to leave my job for a few years. How will that affect my benefits? A As long as you eventually accrue 40 quarters of coverage, you will still get retirement benefits. The checks may be the same size or slightly smaller than if you did not take time off.

Q I'm married but have never worked for pay. Will I still get a Social Security retirement benefit? A You will receive a benefit equal to 50% of your husband's or wife's by meeting three tests: you have been married at least a year, you have not earned enough Social Security coverage to get your own retirement benefit equal to more than 50% of your spouse's, and you wait until 65 to receive the benefits. If you start collecting the checks at age 62, your benefit will be only 37 1/2% of your spouse's, not 50%.

Q I was married for 15 years before I divorced my husband, and I have never worked for pay. Am I entitled to Social Security benefits as his former spouse? A If you were married at least 10 years, have been divorced for at least two years and remain single, you are eligible for spousal benefits at age 62.

Q What will happen if I remarry? A That depends on your age. If you remarry at 60 or later and then retire, you will get benefits based either on your current spouse's earnings or your former spouse's, whichever are more. Tie the knot before 60, though, and your first marriage won't count.

Q I now get Social Security retirement checks, but I plan to start working part time. Will I get smaller benefits as a result? A You might. People aged 65 to 69 with employment income of more than $8,400 in 1988 ($6,120 for anyone 62 to 65) will lose some Social Security benefits. Their checks will be reduced by $1 for every $2 over those thresholds. So if you are 65 to 69 and earn more than $28,512 this year, you could lose all your Social Security benefits. The earnings limitation rises annually with wage inflation.

Q I'm 35 and have a wife and a young daughter. If I die tomorrow, what will Social Security pay them? A Based on your age, your family will get special survivors benefits if you have accumulated six quarters of earnings out of the last 13 -- that is the equivalent of roughly 1 1/2 years of work. Your child under age 18 will receive 75% of your retirement benefit until she turns 18, up to $9,600 annually. Your wife will get 75% of your benefit as long as she is caring for a child under 16; she will receive your full benefit when she is 65. Those survivor payments would be smaller if you died at an older age, in part because younger families tend to need more income. Social Security will also give your family a lump-sum payment of $255 toward your funeral expenses, regardless of your age.

Q Will I owe income taxes on my Social Security retirement benefits? A That depends. Up to half of your benefits will be taxed if the total of your adjusted gross income, tax-exempt income and half of your annual Social Security benefit is more than $32,000 (for married couples filing jointly) or $25,000 (for single people). You will be taxed on half the amount exceeding the threshold or half of your Social Security benefit, whichever is smaller.

Q I was hurt in an accident, and my doctor says I won't be able to work for a while. Will I get Social Security disability benefits? A Possibly. You must meet three stiff requirements to qualify for disability benefits. First, you must be physically or mentally unable to perform any substantial work. Second, your disability must be expected to last at least 12 months or reduce your life expectancy to less than 12 months. Third, you must have built up enough quarters of Social Security coverage -- 40 in the past 10 years, fewer quarters if you are younger than 31. If you apply for benefits at a local Social Security office, bring the same documents you would to get retirement benefits, plus addresses and phone numbers of your doctors and hospital.

Q When must I get a Social Security number for my child? How do I do this? A You must apply by the time your child turns five. Otherwise, you will not be able to claim the child as a dependent on your income tax return. Bring your child's birth certificate and proof of I.D. for both you and your child to your local Social Security office. There, fill out Form SS-5.

Q I hear that Social Security is building a huge surplus. A few years ago, some people said the system was bankrupt. What's really happening? A The surplus has been building since Congress shored up the then teetering system in 1983. Its purpose is to guarantee the solvency of the system when the large baby-boom generation begins to retire after the turn of the century. This year, Social Security expects to collect $41 billion more than it pays out -- and that amount could rise to $12 trillion by the year 2030.

Q What is the government doing with the surplus? A The surplus is being used to buy long-term Treasury bonds. The bonds in turn finance government expenditures, which appears to cut the federal deficit. So the surplus essentially is loaned to the Treasury.

Q How does the government plan to come up with the money to pay back this loan when the Treasuries mature? A No one knows. But according to many Social Security experts, it's a fair bet that the answer will include higher income taxes.

Q How can I get an estimate of my future Social Security benefits? A That task recently became relatively simple. Call 800-937-2000 or go to a Social Security office and ask for Form SSA-7004. Once you complete it, send it back and expect to wait four to six weeks for the reply.

Q Do I need to carry my Social Security card with me at all times? A No. But if you lose your card, go to your local Social Security Administration office promptly and ask for a new one.