Ask Clark: Does Collecting Unemployment Affect Social Security in the Long Run?

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The coronavirus pandemic has forced millions onto the unemployment rolls almost overnight. Naturally, many of those people are wondering what impact unemployment compensation will have on their future Social Security benefits.

Here’s What You Need to Know About Social Security Benefits and Unemployment Compensation

The good news it that Social Security does not count unemployment compensation as earnings. Therefore, it has no impact on your Social Security benefit.

But even if it did count unemployment, most people still wouldn’t have cause for concern, according to money expert Clark Howard.

“The way Social Security is calculated, it really wouldn’t make any meaningful impact even if it was counted,” Clark says.

As a reminder, your Social Security benefits are calculated based on your 35 highest-earnings years.

That’s why, under normal economic conditions, many personal finance experts recommend negotiating a raise or taking a better offer at a new employer to bump up your earnings.

Likewise, if your main employment is secure in spite of coronavirus disruption, you could also consider taking on a second gig like a work-at-home job right now. Doing so would be really beneficial to your wallet both in the short term and the long run.

What If I’m Collecting Social Security Before My Full Retirement Age?

The other question we’re hearing a lot is, “Does collecting unemployment benefits affect Social Security if you’re under full retirement age and already receiving a month check from the Social Security Administration while working part-time?”

Under current law, you’re allowed to earn up to $18,240 annually on the job without it impacting your Social Security benefit before your full retirement age.

If you cross that threshold, $1 gets deducted from your benefit for every $2 earned above the limit. Thankfully, you get that money back when you hit your full retirement age. Get full details here.

Ultimately, Clark says, most people likely won’t have anything to worry about.


“If you’re older and receive unemployment benefits, you won’t get pushed into the earning ceiling for people 62 to 66,” he says.

So, in the final analysis, getting unemployment benefits is really just a positive. The only potential negative is if the benefits are taxed in your state, according to Clark.

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