Saturday, April 17, 2010

Five states still deduct social security offsets from unemployment benefits; VA recently reinstated offset (AARP)

A column called “The Short Answer: Benefits in the Balance” on p. 24 of the May-June AARP Magazine asks if someone can collect social security benefits and unemployment benefits at the same time.

The answer is that five states still apply a “social security offset” similar in concept to what some private pension plans do (even at age 62, assuming early retirement -- discussed on this blog July 1, 2007). They subtract 50% of the person’s weekly social security benefit from the unemployment check. These states are Illinois, Louisiana, South Dakota, Utah, and Virginia. In fact, Virginia recently reinstated the social security offset because of budget problems. Utah has postponed ending its law, and eight years ago, 22 states, including these, had offset laws.

Social security will not count unemployment as wages in the “earnings test” for early retirees, but these states penalize people for receiving social security, so residents in these states may want to consider postponing starting social security (eventually making the monthly benefit actuarially larger) to maximize their unemployment.

The article suggests checking your state at the “Service Locator” website here.

I could not find this article online yet at AARP, but I found an older story by Trish Nicholson from July 15, 2008 (just before the financial crash) at AARP, “A few states hold on to unemployment offset laws”  here.
Picture: near Yankee Stadium, where they filmed "The French Connection" around 1971.

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