Can You Collect Unemployment If You Get Social Security?

Can You Collect Unemployment and Social Security?

It is possible for some older adults to collect unemployment benefits at the same time they get income from Social Security. The rules for doing this can get complicated, and unemployment insurance laws are different in every state. 

Tens of millions of older American adults collect a monthly benefit from the Social Security Administration (SSA). At the same time, tens of millions more Americans receive bi-weekly unemployment benefits from their state's unemployment insurance department. There is some overlap between these groups, and some seniors manage to collect unemployment benefits for periods when they are out of work or underemployed.

What Is Social Security?

Social Security is one of the most widely used benefits the federal government offers. Each month, the SSA pays out benefits to nearly 72 million eligible citizens.

Most of these payments are for seniors who have reached retirement age and no longer work, though a significant number of program participants are spouses and survivors of enrollees who have passed away, or U.S. citizens whose disabilities make them unable to work. The program interacts in some way with over 170 million Americans, most of whom are either currently enrolled or eligible for future participation.

Social Security benefits are funded through payroll withholding taxes. Each pay period, 6.5% of a worker's gross pay comes out to fund their eventual Social Security benefit. Employers pay an additional 6.5%, with self-employed workers required to pay the full 13% as a flat tax.

Workers become eligible for a monthly payment when they earn 40 work credits over a working life of at least 10 years, with the benefit amount set by law. Work eligibility requirements are relaxed for younger adults who develop a disability before age 65.

What Is Unemployment Insurance?

Unemployment assistance is available to most workers who lose their jobs through no fault of their own, such as former employees who have been laid off or terminated without a specific cause.

States vary in what they consider no-fault terminations, which may affect approval of benefits. Reduced benefits are generally available to workers who remain employed, but whose working hours have been reduced by their employer.

Like Social Security, unemployment benefits are funded via a payroll withholding deduction, though the amount varies with the state where the work is performed.

A minimum amount of work over the previous few years is usually required to build up eligibility, with the payment award amount determined by the average income a worker earned over the look-back period, which is the period of time used for computing base wages.

As a rule, unemployment beneficiaries must look for work and be available for re-employment in order to continue to receive benefits.

Who Is Eligible for Unemployment and Social Security?

Not everybody is eligible for Social Security or unemployment benefits. Both programs have lifetime work history requirements that have to be met before the programs are available to workers. Both programs also have strict citizenship, residency and other criteria to judge applicants' eligibility for benefits.

Unemployment Eligibility

Unemployment eligibility criteria are set at the state level by the department in your state that administers the program. Your state legislature may also have passed laws regarding who can and cannot qualify for unemployment.

While there is some variety in the laws of each state, a worker is generally eligible for unemployment benefits if they are:

• Citizens or permanent legal residents of the United States
• Residents of the state where they are applying for benefits
• Capable of demonstrating a qualifying work history, usually by paying enough into the system in previous years to build up an unemployment trust fund for themselves
• Unemployed for reasons not their own fault, such as layoffs, or they're underemployed and not working their usual weekly hours

Some states permit unemployed workers to apply for benefits despite having been terminated with cause, and some even permit benefits for workers who have voluntarily quit.

Circumstances play a large role in determining eligibility for unemployment benefits, and the approval process may take a long time if the employer contests the former employee's claim.

Social Security Eligibility

Social Security retirement benefits are available to eligible American adults who have reached retirement age and have a qualifying work history.

The maximum amount paid each month is set by law, and the specific award to each beneficiary depends on the earnings they reported during their 10 highest earning years of work. To receive Social Security benefits, a person must be:

• A U.S. citizen or permanent legal resident of the United States with an established residency period
• Able to demonstrate a 10-year work history and have at least 40 work credits, which are awarded for earning a minimum amount of income each quarter
• Not specifically barred from program participation, such as certain railroad workers whose pension plans have opted out of Social Security on their behalf
• Disabled, retired or the surviving spouse or dependent of a program participant

As a rule, seniors become eligible for a partial retirement stipend at age 62, full retirement at age 65, and enhanced retirement benefits beyond that. For example, a senior who was born before 1943 who delays retirement until age 70 can expect to get an extra 8% in Social Security benefits when they do start receiving retirement income.

Receiving Both Unemployment and Social Security

It used to be the case that many states reduced the amount of unemployment benefits they paid to older workers who also received Social Security payments. Such offset laws were on the books in 20 states in the early 2000s, though active advocacy has all but eliminated these laws.

Both Social Security and unemployment assistance place limits on how much income you are allowed to earn outside of the program. Beneficiaries who exceed these limits may see a reduction in the benefits they get from both the SSA and their state's unemployment agency.

Fortunately for recipients, the SSA does not count unemployment benefits as income for reporting purposes, and 49 states (excluding Minnesota) do not count Social Security benefits as income for unemployment reporting.

Applying for Both Programs

The process of applying for both unemployment and Social Security is not significantly different from applying for each program on its own.

U.S. citizens become eligible for partial Social Security upon reaching age 62, with progressively higher benefits for deferred enrollment. To apply for retirement benefits, visit the SSA website and submit an application online. You may also apply by mail or in person at your local SSA office.

Most people can apply for unemployment online or by phone through their state's unemployment office. In some cases, you may be scheduled for a telephone interview to confirm some of the details of your application.

Outside of Minnesota, you do not generally have to disclose Social Security payments as income, though it is a good idea to mention your benefits to an unemployment intake worker to make sure the required paperwork is in order.