How will unemployment affect my Social Security benefits?
Q. I am collecting Social Security benefits and I was working part-time until the coronavirus hit. I'm now collecting unemployment, including the $600 weekly benefits. How will this affect my Social Security benefits at the end of the year?
A. We’re sorry to hear you lost your job.
Your Social Security benefit is calculated based on your 35 highest years of earned income.
Earned income includes salaries, wages and self-employment income, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.
He said if you work part-time while you are retired, your wages can actually increase your future Social Security benefits.
“Unemployment compensation, including the additional $600 weekly benefit, is taxable income for federal income tax purposes, but since it is not `earned income’ it will not increase your future Social Security benefits,” Kiely said. “So in 2021, your monthly Social Security check will not change except for any cost of living adjustments.”
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Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.