If you lost your job during the pandemic or in recent months and are nearing retirement age, you may eligible for unemployment benefits and Social Security. Unemployment benefits are distributed to workers who have lost their financial support and meet certain requirements. If you are at least age 62 or have become disabled, you could also consider beginning to take Social Security payments. Taking both unemployment and Social Security benefits at the same time may be possible, but you’ll want to be aware of certain factors that could impact your income and taxes.
If you lose your job and are nearing retirement or disabled:
— Check your options for unemployment benefits.
— Evaluate if you want to apply for Social Security.
— Talk to a financial advisor about your options.
— Apply for benefits that meet your needs.
— Be aware of how your future benefits could be impacted.
Read on to learn about ways to collect unemployment and Social Security, along with the right balance to strike for your finances.
How to Collect Unemployment
If you lose your job, check your options to see if you qualify for unemployment benefits. “To be eligible for unemployment compensation in most states, unemployment must be through no fault of your own,” says Sabrina Taylor, a certified rehabilitation counselor, work incentives practitioner and assistant professor at Coppin State University in Odenton, Maryland. “Contact your state’s unemployment insurance program once you become unemployed.” File your claim with the state where you worked. “It generally takes two to three weeks after your claim is filed to receive your first benefit check,” Taylor says. As you look for a new job, you can schedule an appointment with an employment office in your area.
[READ: How Much You Will Get From Social Security.]
How to Collect Social Security
If you are unemployed and close to retirement age, you could opt to receive Social Security payments. Before beginning the process, “decide if applying is the right decision since it will impact your life,” says Bill Ryze, a certified chartered financial consultant and board advisor at Fiona Financial in Memphis. If you apply for Social Security before your full retirement age, your monthly benefit payments will be reduced. Waiting until age 70 to start Social Security payments will lead to a bigger monthly benefit. If you go back to work after you have signed up for Social Security and you are younger than full retirement age you will only be able to earn up to a certain amount before some of your benefit will be temporarily withheld.
If you want to receive Social Security payments, you can fill out an application online, call the Social Security Administration or visit a nearby office. Once you’ve been approved, you could receive a Social Security paycheck every month for the rest of your life.
Collecting Both Unemployment and Social Security
While it’s possible to receive unemployment and Social Security benefits at the same time, there are some caveats to consider. “Social Security, for both purposes of taxation and for claiming before full retirement age, does not consider unemployment benefits as earnings,” says Jamie Hopkins, a financial planner and managing partner of wealth solutions at Carson Group in Bryn Mawr, Pennsylvania. “As such, unemployment benefits do not affect Social Security retirement benefits.” You can check with your state’s unemployment office to see how your unemployment benefits will be impacted by Social Security, as each state dictates its own rules.
[See: 10 Ways to Increase Your Social Security Payments.]
Unemployment and Social Security Disability Benefits
If you are disabled or become disabled after spending years working and paying into the Social Security system, you may be eligible for benefits that will help cover your lost income. Those who file for Social Security disability benefits will need to go through a process which includes providing medical records and documentation. It may take time, from months to several years, to get approved for Social Security disability payments. “Unfortunately, the financial responsibilities don’t stop until your request is approved, so most people opt to file for unemployment as a means of support,” Ryze says.
Social Security disability and unemployment benefits serve different purposes. Unemployment benefits aim to help those who are in between jobs and need to support themselves. Disability benefits are geared toward individuals who can no longer work at the same capacity, or work at all, due to their condition. For this reason, filing for both could be contradicting.
Still, it may be possible to receive both benefits. “Individuals receiving disability benefits have been determined unable to work due to their disability,” Taylor says. “They will just need to justify to Social Security that their disability does impact their ability to prepare for, obtain or maintain suitable and gainful employment.”
[Read: Social Security Changes Coming in 2022.]
Pension and 401(k) Distribution Considerations
Withdrawing funds from retirement accounts does not impact the amount you will receive from Social Security. “Income from your 401(k) or another retirement plan doesn’t affect your Social Security retirement benefits,” Ryze says. However, you may have to pay taxes on part of your Social Security benefit if your income exceeds a certain amount.
Retirement account distributions or pension payments could impact your unemployment benefits because they are considered a form of income. “Retirement payments such as receiving a pension or 401(k) distribution may reduce an individual’s unemployment compensation,” Taylor says.
It can be helpful to explore your options and talk to various agencies before filling out applications for government benefits. You don’t want one type of benefit to negatively impact your ability to claim another. Overall, the best decision will be one that allows you to live as comfortably as possible as you transition into a new job or retirement.
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Can You Collect Unemployment and Social Security? originally appeared on usnews.com
