Can You Get Unemployment Again After It Runs Out the First Time
Unemployment is tough to weather, no matter how old you are. However, for those individuals who are close to retirement but are laid off (or forced into an early retirement), unemployment can be even more disastrous. This is especially true during this pandemic. On average, laid-off workers over the age of 55 took 11 months to land their next job. And that was before the economic shutdown caused by the pandemic. With over ten million people currently unemployed, the job search will only take longer. The longer it takes, the closer these experienced workers are to reaching their actual retirement age. That makes it even harder for employers to be interested in hiring them. It's a lose-lose situation for many.
If you find yourself in that limbo state — where you're too young to retire but having difficulty finding another job — what are your options? Here is what you need to know about collecting unemployment if you retire early. Or if you are simply forced into an early retirement.
Keep Looking for a New Job
First, the good news. You are certainly eligible to collect unemployment benefits if you end up being forced to retire. In fact, you are also eligible to receive all the additional employment benefits, like the $300-to-$400 a week that Congress keeps extending. The only caveat is that you need to be actively looking for work while you receive these benefits.
Specific unemployment laws vary from state-to-state. However, the basis of all unemployment insurance is to help laid-off workers while they are actively look for a new position. Some states have suspended this requirement for now, due to Covid-19. However, some are already starting to change their rules back.
California's Employment Development Department, for instance, recently started denying some claimants when they stated in their certification questionnaire that they weren't actively looking for work. That was despite their official website still saying it's not a requirement right now. Whether those rejections were in error or not is irrelevant. You just need to know that you really should be looking for work in order collect unemployment benefits. So, if you prematurely retired (by force or not), but have no plans to look for a new position, then you likely won't receive unemployment benefits. Unfortunately, you're considered no different than a lazy 30-something who tries to get by without bothering to work a real job.
Social Security Does Not Affect Unemployment
Here's another piece of good news, though. It has to do with your Social Security benefits. If you've already reached the minimum age to begin drawing your Social Security, those benefits will not be deducted from your unemployment insurance benefits. So if you're already collecting Social Security (or are considering collecting it in order to help you weather your late-career unemployment) you can count on it being an addition to your unemployment benefits. Assuming you qualify for unemployment, that is.
On top of that, collecting unemployment benefits may help you delay the need to receive Social Security. As the longer you delay the start of getting the Social Security check, the higher your potential payout. This can only be a good thing.
Severance Packages and Pensions Do Affect Unemployment
Again, the exact laws will vary from state-to-state. However, if you receive a severance package from your company at the time of your lay-off (or forced retirement), then you can expect your unemployment benefits to be smaller. Many states will determine the amount of unemployment benefits based on the size of your severance.
In addition, drawing some sort of pension from your company can also affect your unemployment benefits. In general, if you receive a lump-sum pension payment, it won't be deducted from your unemployment compensation. However, you might take your pension payments on a monthly basis instead. If you do this, your unemployment benefits will be reduced based on what you would receive per month.
Still, any additional Federal increase in additional benefits that Congress approves as part of pandemic relief will likely added to your check, as long as you qualify. That means that even if your pension or other income reduces your payment, you still get the full extra payment until the extensions expire.
The Bottom Line
If you are facing the prospect of unemployment close to the end of your career, the best option is to check out your state's Department of Labor website. It will help you to understand the specific rules that apply in your area. It will also provide you the necessary paperwork to apply for unemployment benefits.
I have a friend who is possibly going to lose his job. He works at a national hotel chain. Their company has had multiple rounds of layoffs already. Plus they have been forcing everyone else to work reduced hours to cut costs. Due to the pandemic, his wife and kids moved back to Taiwan because of the incredibly high infection rate here. He's actually thinking of just relocating there for good.
Either way, he's planning his retirement from the hotel industry altogether. He just doesn't see a strong immediate future for the industry, since business travelers aren't expected to come back in normal volume for at least a few years. He's dreaming of the scenario where he gets laid off, receives a severance package, and can start receiving unemployment benefits. This way, he will have income for the foreseeable future while he looks for work or makes the move to live abroad.
While it's never ideal to be forced out of a job, my friend is actually hoping it happens to him. If you are a few years away from retiring, unemployment benefits plus a possible severance package may tide you over to a comfortable retirement. Being forced to retire doesn't have to be a financial disaster, as long as you know your rights. Do your best to keep all your options open. It really depends on how you look at it.
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Source: https://walletgenius.com/financial-advice/can-you-collect-unemployment-if-youre-forced-to-retire/
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