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Preparing for retirement is a full-time and often frustrating job. That's because the central question affecting all planning cannot be answered. Namely, how long are you going to live?

Because you have no idea how long you will need your retirement stash, what to do with it depends on your circumstances right now. When should you take your Social Security benefits? At age 62? Sixty-five? Seventy? What should you do with your pension or 401(k) — take the money as a lump sum and invest it yourself, or take it as an annuity with guaranteed payments for the rest of your life?

Fortunately, there are guidelines that can demystify the decision- making process for using Social Security benefits and figuring out the advantages of lump-sum distributions versus annuities. In dealing with retirement plan distribution issues, there is also help for another problem that can arise — how not to be overlooked by a former employer's plan in which you were vested before you moved to another job.

Social Security

If you were born in 1937 or earlier, you are eligible for full retirement benefits at age 65, as long as you have contributed to the system for at least 10 years. For those born between 1938 and 1960, full retirement age gradually peaks at 67.

Whenever you were born, you can start taking benefits at age 62, but the amount will be discounted to reflect the longer period you are receiving checks. Those born in 1937 or earlier had their benefits discounted by 20 percent annually (when they took the benefits at age 62); those born in 1960, for whom full retirement age is 67, will have their checks reduced by 30 percent.

You could also wait to receive benefits until you are 70. The government offers a larger benefit, called the delayed credit, as an incentive to do this. If you were born in 1937, for example, and wait until you turn 70, the benefit will be 6.5 percent a year higher, a figure that rises to 8 percent for those born in 1943 or later.

There is another factor in the calculation: how long you plan to work and how much you think you will earn. If you are between 62 and 64 and receiving Social Security, the government allows you to earn $11,280 this year without penalty. Earnings, by the way, mean wages from employment, as opposed to income from a pension or investments. If you earn more than $11,280, you lose $1 in benefits for every $2 you earn.

Between the start of the calendar year in which you reach your full retirement age and the month in which you actually qualify for benefits, you can earn $30,000. Above that amount, you will lose $1 in benefits for every $3 you earn. If you wait to receive your full retirement benefits, there is no limit to the amount you can earn from working.

As Robert Muksian, a professor of mathematics at Bryant College in Smithfield, R.I., and an expert in Social Security, points out, all you have to do is earn twice your benefits plus the earnings limit, and you give your entire Social Security check back to the government. Suppose you are 62 and are entitled to $8,000 a year from Social Security, versus $10,000 you would get if you had waited until 65. If you earn $27,280 this year, you surrender that $8,000 to the employment penalty.

"We advise our clients who don't expect employment income to take Social Security at 62 because you collect for three extra years and that gives you extra cash to invest or use for expenses," said Milton Stern, a certified financial planner with Bridgewater Advisors in Manhattan. "But if you're working, you're better off waiting till 65 when you keep what you get."

Scott Kays, a certified financial planner with the Kays Financial Advisory Corporation in Atlanta, does a calculation to reinforce the idea of taking your benefit as soon as you can, provided you do not run afoul of the employment penalty. You have to live to be 77, he said, before you would be better off if you had begun taking benefits at 65. That's how long it takes for the higher payments you get at 65 to offset the three extra years you have been collecting benefits starting at age 62.

Suppose you invest the benefits you receive between 62 and 65 in something that pays 6 percent? "It would take you 42.8 years to break even, or until you are 107.8 years old, to be better off waiting to reach 65," Mr. Kays said.

There is not much argument in favor of delaying your benefit until you are 70. Professor Muksian calculated that with various situations the point at which you would be better off waiting till 70 rather than taking your benefits at 65 is anywhere from 80 to 85 years old. The probability that someone who is 70 will live to be 80 is approximately 67 percent, Professor Muksian said, and the probability of living to 85 is around 44 percent.

401(K) and Pension Benefits

The next hurdle in the retirement steeplechase is figuring out what to do with your pension benefits. People with 401(k) plans, some of whom are covered by a traditional, albeit rapidly vanishing, defined benefit pension plan, can choose between taking their booty in a lump sum or converting it to an annuity. This choice, according to Mr. Stern, is "the single most important financial decision most people will make in their lifetime."

If you choose the lump sum, you can roll it into an individual retirement account, where investments continue to compound tax-free until you withdraw all the money. With an annuity, you leave your money in the plan, and the administrators convert it to a monthly sum for the rest of your life. Depending on the annuity, you can also designate a beneficiary to receive the payments after you die.

What to do depends not only on your circumstances but also on your personality. Paul Westbrook, a certified financial planner in Ridgewood, N.J., and the author of "J. K. Lasser's New Rules for Retirement and Tax," said, "Once you are retired, a sense of security is very important and getting that monthly check is secure." That sentiment and any nervousness about investing will tilt the decision toward an annuity, as will a concern that you will outlive your assets.

The advantage of a lump sum is control. You choose how your money will be invested and decide how much you want to withdraw in any given year. If you have heavy expenses in one period, you can increase your distributions to cover them. For many people, leaving an estate is important, and you can arrange to leave your lump sum as you wish. An annuity, by contrast, dies with you or your beneficiary.

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