In a changing economy, older workers may face difficulties finding a job. Among workers age 50 and older, 6 in 10 have experienced subtle forms of discrimination, according to research by the AARP in 2024.
If you recently lost your job and are nearing retirement age, you may be eligible for unemployment assistance and Social Security benefits. Eligible applicants can receive both at the same time.
Unemployment benefits are distributed to workers who have lost work and meet specific requirements. If you are at least age 62 or have become disabled, you may also consider claiming Social Security payments. While simultaneously taking unemployment and Social Security benefits is possible, be aware of certain factors that could impact your income and taxes.
If you lose your job and are nearing retirement or are disabled, consider:
— How to collect unemployment
— How to collect Social Security
— Collecting both unemployment and Social Security
— Unemployment and Social Security disability benefits
— Pension and 401(k) distributions
How to Collect Unemployment
After a job loss, evaluate your options to see if you qualify for unemployment benefits. To be eligible, most states require that unemployment must be through no fault of your own. Once you lose your job, register with the unemployment insurance program in the state where you were employed. Generally, applicants can expect to receive a benefit check in two to three weeks.
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How to Collect Social Security
If you are unemployed and close to retirement age, you may choose to receive Social Security payments early. “It’s important to understand that if you take your Social Security early, you will experience a cut in benefits,” says Chuck Czajka, a certified Social Security claiming strategist and founder of Macro Money Concepts in Stuart, Florida. “Waiting until your full retirement age will allow you to collect 100% of your benefits and does not affect your unemployment.”
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.
To receive Social Security payments, you must complete an application online, call the Social Security Administration or visit a nearby office. Once approved, you’ll receive a Social Security check every month for the rest of your life.
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Collecting Both Unemployment and Social Security
While it’s possible to receive unemployment and Social Security benefits simultaneously, 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, chief wealth officer at WSFS Bank in Philadelphia. “As such, unemployment benefits do not affect Social Security retirement benefits.” You can check with your state’s unemployment office to see how your benefits may be impacted by Social Security, as each state dictates its own rules.
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 must go through a process that includes providing medical records and documentation. Approval for Social Security disability payments may take months or several years.
Social Security disability and unemployment benefits serve different purposes. Unemployment benefits aim to help those between jobs who need support, while disability benefits are geared toward individuals who can no longer work in the same capacity or at all due to their condition. For this reason, filing for both could be contradictory.
Still, collecting both benefits is possible. “Individuals receiving disability benefits have been determined unable to work due to their disability,” says Sabrina Taylor, a certified rehabilitation counselor and president of Maryland Counseling Association. “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.”
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Pension and 401(k) Distributions
Withdrawing funds from retirement accounts does not impact the amount you will receive from Social Security. 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. The best decision will allow 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
Update 01/21/25: This story was published at an earlier date and has been updated with new information.