Can You Collect Unemployment Benefits If You Get A Pension?

Last Updated on May 11, 2022 by Fair Punishment Team

With productivity rising to an advanced age, older workers have started to face the typical job concerns, such as low incomes and job losses. 

If senior citizens lose their job, they may also struggle financially, dealing with issues around their pension and unemployment benefits.

A big social security help in the US, there is no age limit to claiming unemployment benefits, as long as you meet all eligibility criteria and you haven’t withdrawn from the labor market.

We find out whether you can collect unemployment benefits as well as a pension.

What Is Social Security?

Social Security is America’s most widely used federal government benefits system. 

Social Security benefits are claimed mainly by seniors who reached retirement age and no longer work, or US citizens with disabilities that don’t allow them to work.

This benefits program is used by approximately 170 million Americans at the moment who are enrolled in the scheme, or eligible for future participation.

Social Security benefits are funded through every worker’s payroll withholding taxes. 

During each pay period, 6.5% of a worker’s gross pay comes out to fund Social Security benefits.

Employers also add another 6.5% to match. For self-employed workers, they are required to pay the full 13% as a flat tax.

US workers are eligible for a monthly benefits payment when they have earned at least 40 work credits over at least 10 years of their working life. 

The law allows for more relaxed work eligibility requirements for younger adults who develop a disability before they are aged 65.

Who Is Eligible For Social Security Retirement Benefits?

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

The law sets down the maximum amount that needs to be paid each month, and the specific amount a beneficiary receives will depend on their earnings during the 10 highest earning years of work.

In order 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, with at least 40 work credits, which are awarded for earning a minimum amount of income each quarter
  • Not barred from program participation. For example some pension plans of railroad workers include an opt-out of Social Security 
  • Retired, disabled or the surviving partner or dependent of a program participant

Senior citizens become automatically eligible for a partial retirement stipend at 62, with full retirement age at 65 and enhanced retirement benefits beyond that.

So, if a senior delays his retirement, he can get extra Social Security benefits when they start receiving their retirement income.

Can You Collect Unemployment Benefits If You Get A Pension?

What Is Unemployment Insurance?

Unemployment Insurance is a government initiative which is funded by collections from non-taxpayers and employers.

Unemployment insurance helps those who are unemployed and actively looking for work.

People can claim UI benefits, as well as Social Security benefits and pension payments. However, this is subject to deductions as per the pension plan. 

This unemployment assistance is available to the majority of workers and those who lost their jobs through no fault of their own.

This applies to, for example, former employees who have been terminated without a specific cause or laid off.

The considerations for no-fault terminations can vary widely from state to state, and therefore impact the approval time and terms for your benefits.

To be able to receive unemployment benefits, beneficiaries must look for work and they need to be available for re-employment.

Generally, those workers who are still employed by with reduced working hours can also claim reduced benefits.

Who Is Eligible For Unemployment Benefits?

Eligibility criteria for unemployment benefits are set at the state level by the individual department in your state that administers the program.

Your state may have also passed specific laws and regulations on who qualifies for unemployment.

With this in mind, there is some variety in the laws of each state, but generally people can claim unemployment benefits if they are:

  • U.S. citizens or permanent legal residents of the United States of America
  • Living where they are applying for benefits
  • Able to demonstrate a qualifying work history. This is usually done by paying enough into the system in previous years to build up an unemployment trust fund
  • Unemployed for reasons not their own fault, such as redundancies. Or they’re underemployed not working their usual weekly hours

In some states, the law also allows unemployed workers to apply for benefits even if their work has been terminated with a cause. 

Other states even permit benefits when workers choose to voluntarily quit their jobs.

This shows that states do not only have different laws for unemployment but they also consider the different circumstances determining eligibility for unemployment benefits.

The approval process for benefits can take some time, particularly if an employer contests the former employee’s claim.

Receiving Both Unemployment And Social Security

In the past, it used to be the case that many states reduced the amount of unemployment benefits for older workers who also received Social Security.

In the early 2000s, 20 states still had these offset laws on their books, but with increasing pressure, these laws have been almost eliminated. 

Only Minnesota still uses offset for reducing benefits for unemployed workers who also receive Social Security payments.

If you want to claim both unemployment and Social Security, you should be aware of how much income you are allowed to earn outside of the program.

If you exceed these limits, you may face a reduction in the benefits you get from your state’s unemployment agency and the SSA.

The main reason why unemployment benefits can be claimed at the same time as Social Security, is that the SSA doesn’t count unemployment as income, and the 49 states (excluding Minnesota) don’t see Social Security benefits as income for unemployment reporting.

Can You Collect Unemployment Benefits If You Get A Pension?

Applying For Both Benefits Programs

What should you do if you want to apply for both benefits programs? The process for applying for both is not much different to applying for each individually.

U.S. citizens automatically become eligible for partial Social security when they are age 62, with increasingly higher benefits when they choose to defer enrollment.

If you want to apply for retirement benefits, you need to visit the SSA website and submit your application online.

Alternatively, you can also apply by mail or in person at your local SSA office.

Applying for unemployment works in a similar way. You can either apply online or by phone through your state’s unemployment office.

Sometimes you may be asked to schedule a telephone interview in order to confirm some of your application details.

While you don’t generally have to disclose Social Security benefits payments as income (outside of Minnesota), it’s a good idea to mention it to an unemployment intake worker so your paperwork is all up to date.

When Can You Retire And Claim Unemployment Insurance?

The Social Security Administration of the US states clearly that the earliest retirement age is 65, for people born in 1937 or earlier.

For anyone born after 1937 until 1943, the retirement age increases successively by two months. This means, those born between 1943 – 1954 can retire at age 66. 

The same applies for people born after 1955. The retirement age increases also by two months each successive year to 67 for those born in 1960 and later.

Can You Collect Unemployment Benefits If You Retire Early?

You can claim unemployment benefits even if you choose to retire early. 

However, the usual criteria for unemployment apply. In most states, you must have been laid off for no fault of your own, or you accepted an early retirement offer by your employer to reduce their workforce.

You may also be allowed to claim UI benefits if you were forced to retire due to health reasons or safety reasons where your employer couldn’t provide you with alternative work.

The exact regulations for this vary from state to state, so it’s best to refer to your state’s website for more details.

Does Pension Affect Unemployment Benefits?

Most states such as California or Georgia have chosen to reduce the unemployment compensation for everyone who receive any type of pension payments. 

It’s good to note here that Social Security benefits are not affected by UI benefits or pension.

Although the reductions vary by state, typically the weekly benefit amount is reduced by the amount contributed by your base period employer towards your pension (with a minimum of 50%).

Final Thoughts

The American work force is getting older, and the job market is a competitive field. It’s commonly much more difficult for older workers to find a new job. 

Luckily, senior citizens can claim unemployment as well as Social Security benefits, together with their pension. 

As the benefits application process can take a while, it’s important that older workers who wish to claim benefits, should apply as soon as possible, regardless of whether they have been given an unemployment notice by their employer.