Table of Contents
Unemployment
Unemployment is administered by the state in which you reside, but it is a joint state-federal program. Although it depends on the State’s guidelines for eligibility, some of the qualification factors are:
- Work and wage requirements for wages earned or time worked during an established period called a “base period”
- You must be unemployed through no fault of your own or quit due to very specific reasons (eg. sexual harassment)
- Meet any additional requirements required by the state in which you reside
There are some additional requirements to be aware of in regards to unemployment and retirement. If your company has a retirement age policy mandating that employees have to retire when they reach a specific age, you don’t have a choice to leave that job. If this is the reason you are no longer employed and your sole income is from Social Security, then it is likely that you are eligible to receive unemployment. However, you must still meet the required wages or time worked in order to be eligible.
You should also keep in mind that you have to maintain the same eligibility as any other unemployment applicants, even in retirement. For instance, this may mean that you have to be actively seeking employment.
Finally, there are some cases where you can receive partial unemployment. For example, if you have reduced work hours or required leave without pay, you can apply for partial unemployment compensation. If you meet the additional eligibility requirements, you will receive payments even with continued work.
Social Security Retirement Benefits
Your Social Security retirement benefits will never be reduced based on your unemployment amount. Jobless benefits are not earned wages; therefore, they do not count towards Social Security’s annual earnings limit. The federal government has no issue with you collecting both Social Security and unemployment.
Also, Social Security survivor benefits should not affect your ability to receive unemployment, but it is best to check with your state agency.
Social Security Offset Laws
It is always a good idea to double check with your state’s unemployment office regarding any ways they can reduce your unemployment payments.
Until fairly recently, over 20 states and the District of Columbia had laws, called Social Security Offset laws, that related to benefits and unemployment. These laws meant that the amount of unemployment you received could be affected by your Social Security benefits. In fact, some of the states would even reduce your unemployment to zero in some instances. However, these laws have since been repealed. The exception is Minnesota which still retains a partial offset law.
Social Security Disability Insurance (SSDI)
You can legally draw Social Security Disability Insurance (SSDI) and unemployment benefits simultaneously. Additionally, the amounts of each will not affect each other. However, getting approved for both SSDI and unemployment is not always easy.
The criteria for SSDI and unemployment often contradicts because to qualify for unemployment you have to be actively pursuing work. Conversely, to receive SSDI payments, you have to be largely unable to work. Therefore, you would have to prove the reasoning behind applying for both and why there is no conflict between them.
Private disability payments will never affect your Social Security disability benefits. However, workers compensation benefits and other public disability benefits may reduce your Social Security disability payments.
This includes disability payments financed by federal, state, or local governments for disabling medical conditions. They do not have to be job-related disabilities and include civil service disability benefits, state temporary disability benefits, or state or local government retirement benefits based on disability. However, Veterans Administration benefits, Supplemental Security Income, or State and local benefits that had Social Security taxes deducted will not reduce your SSDI.
If you receive public disability benefits, including workers’ compensation, and Social Security disability benefits, the total between the two cannot be more than 80 percent of your average current earnings before you became disabled. If it is greater than 80 percent, the excess amount will be deducted from your Social Security disability benefits.
Supplemental Security Income (SSI)
Even though Supplemental Security Income is not technically Social Security, it is administered by the SSA. Unemployment payments directly affect Supplemental Security Income (SSI) because there is an unearned income limit in order to qualify. This is because SSI is a program that is based on the needs of the recipients. The unearned income limit for SSI is a separate amount from the substantial gainful activity limit. Both limits change each year, but the unearned income limit for 2021 is $814 for an individual and $1211 for a couple.
Unearned income that counts can refer to other Social Security benefits, pensions, State disability payments, unemployment benefits, interest income, dividends and cash from friends or relatives.
The Social Security Administration will not count other unearned incomes including a public agency’s refund for real property or food, State funded needs based assistance, any amount of a grant, fellowship, or scholarship, home grown food consumed by your household, assistance received due to the Disaster Relief and Emergency Assistance Act, and other sources. If you are unsure, it is best to check with the Social Security Administration.
Pension and 401(k)
Distributions from a company pension or 401(k) are not the same as Social Security benefits and do count as income when it comes to unemployment eligibility. Every state has its own unique requirements, but generally your distributions cannot exceed a set amount. If you withdraw more than that amount, then your unemployment payments may be reduced. If it reaches a separate point, you may be disqualified from unemployment altogether.
It is also important to consider the working regulations in regards to a pension. You may want to continue working to get off of unemployment again or in order to add to your cash-flow, but you don’t still want to draw your pension. Usually, you can still receive your pension if you are officially retired, but still work. Pensions are considered part of your compensation package so, generally, they cannot be taken away from you.
However, there are some limitations you need to be aware of as well. If you work for the same employer that you retired with you cannot be a full-time employee and still receive your pension distributions. If you work for a different employer, you can work full-time, typically 40 hours per week, and still receive your pension. These pension payments are fixed and will not be reduced by your working income.
You may also want to consider the payment options for your pension plan if you believe you may be working after retirement. For example, some companies offer lump sum payment options instead of monthly.
If you are collecting Social Security benefits, but have yet to reach full retirement age, your benefits may be reduced depending on your earning, but there is no limit or deductions after you reach full retirement age.
Special Payments
When you retire, you may still have payments for work completed before you ever received benefits. If the payments are for work that you completed before retirement, they generally do not affect your social Security benefits. This can include bonus, accumulated vacation or sick pay, severance pay, commissions, back pay, and some other additional types. If you were self-employed, then net income after the first year you retire counts as a special payment if you performed the services before your Social Security benefit entitlement.
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