Will Unemployment Benefits Affect My Social Security Benefits?

Social Security is one of the great pillars of the U.S. economy. Without it, many retired and disabled Americans would find it difficult to make ends meet. If you are currently unemployed and receiving unemployment benefits—or you are likely to in the future—you might be wondering how it will affect your social security benefits.

Will your unemployment benefits affect your social security benefits? The short answer is “no”. Social Security does not consider your unemployment benefits as earnings. Unemployment benefits are not considered as salary and, therefore, not counted.

The clear implication of this is that any type of Social Security benefits will not be affected by your unemployment benefits. However, if you are receiving Social Security benefits, it may reduce your unemployment benefits.

Social Security Benefits

As you may already know, Social Security is a federal program of social insurance and benefits instituted in 1935 as a part of the New Deal. It’s one of the largest government programs, not only in the U.S, but around the world. Social Security pays out hundreds of billions of dollars to beneficiaries each year. The benefits you can receive under this program include retirement income, disability income, Medicare and Medicaid, and death and survivorship benefits.

Based on the year of your birth, you may be eligible for retirement benefits between the ages of 62 and 67. The amount you can receive will be based on the average wages you have earned over your lifetime, with a maximum calculable amount of $102,000 (as of 2008). Your spouse will also be eligible to receive Social Security benefits, even if he or she has a limited or non-existent work history.

To be eligible to receive Social Security benefits, you must make your contribution to the system through payroll taxes. In order to be able to draw retirement or disability benefits, you must earn the minimum “work credits” set by the Social Security. A work credit is earned by making a specific amount of income and paying Social Security taxes on that income. Four is the maximum credits you can earn in a year, and the number of credits required for retirement eligibility is 40.

Unemployment benefits

Unemployment benefits, on the other hand, are the benefits given to the unemployed for sustenance until then can find employment. In order to collect unemployment benefits, you will be required to file an application stating why you are jobless, listing any other sources of income you may have, and revealing any assets you can use to draw an income.

To receive unemployment benefits, you must provide proof that you are currently searching for a job and verify that you are able and willing to work.

You will be disqualified from collecting unemployment benefits under the following conditions:

• You have quit your job without a good reason
• You have resigned because of illness (since you may be eligible for disability benefits)
• You have quit your job to get married
• You are involved in a labor dispute
• You are self-employed
• You are attending school

As stated earlier, your unemployment benefits, if you are receiving any, will not affect your Social Security benefits. But your Social Security benefits may reduce your unemployment benefits. The amount reduced differs from state to state because each state has its own Social Security offset laws.

For example, if your state’s offset law requires unemployment benefits to be reduced by half of the Social Security benefit and if your Social Security benefit is $1,200, then your unemployment benefit will be reduced by $600. The good news is that while most states have offset laws, only a few states actually implement them.

Unemployment does not harm or help Social Security since any unemployment benefits you receive are not counted as income. However, being unemployed for a long period of time will have some negative effects on your Social Security because of lower income during the productive years of your life, which means lower contribution to the Social Security system, which translates into lower amounts in Social Security benefits when you retire.

If you have any other questions about Social Security benefits or unemployment, it is in your best interest to consult with an social security attorney experienced in this area. They will be able to guide you through the application process, and determine what you should do in your situation.