Does unemployment affect future SS benefits?

October 2, 2009 12:49 PM

Does receiving unemployment affect future Social Security benefits?

I have a relative who was let go in the past week by his company because they decided to close his division. I told him that he should get unemployment payments until he finds a new job, but he told me he didn't want to receive them because he thought it would be "taken out of his future Social Security".

So... does receiving unemployment affect receiving Social Security benefits in the future? Is there any downside to receiving unemployment?

By the way, this is in California, and he is in his early thirties, if that is relevant.

posted by NeoLeo to work & money (6 comments total)

No, they come from different sources. Unemployment is state-managed, while Social Security is issued from the federal government.
posted by inturnaround at 1:12 PM on October 2

To my knowledge, this isn't the case, and the SSA appears to confirm this. Even if it were, money now is worth a lot more than money in 30 years, so either way he should take the unemployment checks.
posted by 0xFCAF at 1:14 PM on October 2

No. Unemployment payments have no direct impact on future Social Security benefits. If your relative were currently receiving Social Security benefits, that could affect the amount of his unemployment payment. Social Security retirement benefit amounts are based on the average monthy earnings over the highest 35 years, so what would have a significant impact on future benefits is long term unemployment.

He does need to keep in mind that unemployment benefits are taxable income and he should arrange for withholding or be prepared to pay any tax due in April.
posted by weebil at 1:28 PM on October 2

I should add: There are scenarios where the State can come after you for repayment of UI benefits and garnishee a Social Security check. Those scenarios are usually related to disability applications and, from what you've said, that's not relevant in this case.
posted by weebil at 1:44 PM on October 2

Even if it were, money now is worth a lot more than money in 30 years, so either way he should take the unemployment checks.

Strictly speaking, that's unknowable. Plenty of deflation forecasts out there....
posted by IndigoJones at 2:41 PM on October 2

Good replies MeFi brothers and sisters. I knew that states took care of unemployment and the feds took care of social security, but I didn't know if or how the two were linked. Thanks very much.
posted by NeoLeo at 4:54 PM on October 2