Can People Eligible for Retirement Still Get Unemployment?


Retirement is an epoch of life to which many people look forward. After having worked many years, retirees can choose to stop working and pursue other interests, while paying for their day-to-day expenses with Social Security benefits and retirement savings. However, not everyone who is eligible for retirement decides to stop working. If you suffer a job loss while eligible for retirement, your retirement status doesn't affect your ability to file for unemployment benefits, too.

Retirement Eligibility

Retirement simply means that a person has commenced the period of his life in which he no longer has to work. American citizens and legal residents who are at least 62 years of age can declare their retirement as a legal status. If they worked and paid taxes for at least 10 years prior to retiring, they are eligible to receive monthly cash payments, as well as health insurance, from the Social Security Administration. Retired people may work full time or part time if they choose; they will still receive their retirement benefits.

Qualifying for Unemployment Benefits

Unemployment benefits are cash payments the local state department of labor pays to people who have lost their jobs. Though eligibility requirements vary among the states, in general, to qualify for unemployment benefits, your employer must have let you go through no fault of your own, such as through a layoff. Recipients of unemployment benefits must have worked at the lost job for a pre-determined period of time. In some states, it's as little as one day; in others, it's as many as 90 days. You must prove, according to each state's guidelines, that you are actively seeking work while receiving unemployment benefits. In general, when you start working again, you are no longer eligible to receive unemployment benefits.

How Unemployment Benefits Affect Social Security Payments

If you experience the loss of a job by being fired or laid off, you may file for unemployment benefits, regardless of whether you are retired or receiving Social Security benefits. Social Security does not reduce your benefits when you start receiving unemployment benefits. However, receiving both kinds of benefits may put your yearly household income above the tax-exempt income limit, which is $25,000 for single or head-of-household tax filers, or $32,000 for married couples filing jointly. If you exceed these limits while receiving retirement and unemployment benefits, you may have to pay taxes on up to half of your retirement benefits.

How Social Security Benefits Affect Unemployment Payments

Unemployment benefits in most states have Social Security offset rules. This means that the state department of labor will deduct all or part of your retirement benefits from the unemployment payment you receive.

Each state varies in how much it will offset your unemployment benefits. Some states will only offset half your Social Security payments; some states will offset the entire amount. Your unemployment benefits may be reduced to zero if your Social Security offset is larger than the amount you receive from unemployment insurance.

How the offset is calculated can be a little complicated. You receive unemployment benefits weekly, but Social Security distributes retirement benefits monthly. To calculate the amount your retirement benefits will offset your weekly unemployment payments, first divide your Social Security benefits into four equal weekly parts, then calculate the percentage of offset from that weekly portion. For example, a retirement benefits payment of $1,000 monthly equals four equal weekly payments of $250. If you live in a state that offsets 50 percent of your Social Security benefits on your unemployment benefits, you would divide $250 by two. Using this example, your weekly offset amount from Social Security would be $125. You would deduct $125 from the amount you receive weekly from unemployment insurance.

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