Will collecting EDD unemployment benefits affect my retirement income later?

ur neighbor is wrong lol. unemployment doesn't mess with social security at all. they're totally different systems. i was on EDD for like 8 months in 2022 and my projected retirement benefits didn't change at all when i checked my SS statement online.

Your question is a common concern, but I can give you some good news. Collecting unemployment insurance benefits from EDD will NOT negatively impact your future Social Security retirement benefits. These are completely separate systems with different funding sources. Some things to know: 1. Social Security retirement benefits are calculated based on your lifetime earnings that you paid SS taxes on 2. Unemployment benefits don't count as earnings for Social Security calculation purposes 3. The gap in your employment history from being unemployed might slightly affect your SS calculation (since you're not contributing during this period), but this effect is usually minimal unless you remain unemployed for many years 4. However, unemployment benefits ARE considered taxable income by the IRS, which is a different consideration If you're worried about your retirement planning during this period, you might want to speak with a financial advisor who specializes in retirement planning.

I JUST went through THIS with my dad!!! He was freaking out about the same thing and talked to someone at social security office and they said NOPE unemployment doesn't hurt your retirement AT ALL!!! Don't stress about it!!

My wife and I were both on unemployment during the pandemic and we had the exact same concern. We ended up comparing her Social Security statement from before and after, and there was barely any difference at all. I think if you're unemployed for like 10 years it might matter, but a few months or even a year isn't going to make a noticeable dent in your retirement calculations.

The problem isn't with Social Security - it's with your 401k or other retirement accounts! When you're unemployed, you're not contributing to those, and that CAN hurt your retirement if this goes on too long. My husband was on EDD last year and we calculated that missing 6 months of 401k contributions (with employer match) set us back almost $9,000 in retirement savings. Don't panic about Social Security, but do think about how to make up the retirement contributions you're missing while unemployed.

I had this same question when I was on EDD last year! I couldn't get through to anyone at Social Security on the phone. The EDD agents don't really know about this stuff either when I asked during my eligibility interview. I was on hold for HOURS trying to reach someone who could give me a straight answer.

Let me address a few retirement-related unemployment misconceptions: 1. Unemployment benefits DO NOT reduce Social Security retirement benefits. 2. Unemployment benefits ARE taxable income federally, though California doesn't tax them at the state level. 3. Brief periods of unemployment (months to a year) have minimal impact on your Social Security calculation, especially if you have a long work history. 4. You cannot contribute to a 401(k) while unemployed since those require earned income through an employer. 5. You CAN contribute to an IRA while unemployed IF you have other taxable income sources. The biggest retirement impact from unemployment usually comes from the temporary pause in retirement savings, not from any direct effect on future Social Security benefits.

I just want to add that while everyone is talking about Social Security, don't forget about Medicare eligibility! That's also based on your work credits, though most people easily qualify. Just something else to be aware of when thinking about your whole retirement picture.

btw i forgot to mention... make sure ur certifying correctly for ur weekly benefits and answering the questions right. if u mess up they can hit u with an overpayment and that WILL mess up ur finances now AND could impact ur retirement savings if u have to pay back a bunch of $$$ later

One other thing to consider - if you're close to retirement age (62+) and end up on unemployment for an extended period, you might want to evaluate whether taking early Social Security retirement might be more beneficial than remaining on unemployment. This is a complex financial decision that depends on your specific circumstances, but it's worth considering if you're struggling to find new employment as you get closer to retirement age.

I went through this exact same worry when I got laid off from my manufacturing job at 55. Spent weeks losing sleep over it! But after doing a ton of research and talking to a Social Security rep, I can confirm what others have said - unemployment benefits absolutely do NOT reduce your future Social Security retirement benefits. They're completely separate programs. The only real retirement impact is missing out on 401k contributions and employer match while you're between jobs. Since you're 58 and have been working for decades, a few months of unemployment won't even register in your Social Security calculation. Focus on finding your next job and don't stress about this - you've got enough to worry about already!

I was in almost the exact same boat as you last year - 59 years old, laid off from a factory job, and absolutely terrified that unemployment would somehow mess up my retirement plans. After reading through all the Social Security publications and even meeting with a financial planner, I can confirm what everyone else is saying: unemployment benefits have ZERO impact on your future Social Security payments. What really helped me was logging into my Social Security account online and seeing that my projected benefits hadn't changed at all even after being on EDD for 4 months. The only thing that stung was missing out on my employer's 401k match during that time, but even that wasn't the end of the world. At our age with 30+ years of work history, a short gap in employment is basically invisible in the Social Security calculation. Hope this helps ease your mind!

I'm 61 and went through this exact panic when I got laid off from my trucking job 6 months ago. Spent sleepless nights worrying that collecting unemployment would somehow tank my retirement benefits. But after calling Social Security directly (took forever to get through!) and speaking with their representative, I got the definitive answer: unemployment insurance has absolutely ZERO effect on your Social Security retirement calculation. They're funded completely differently - Social Security comes from payroll taxes you've already paid over your working years, while unemployment is funded by employer taxes to the state. The rep even pulled up my earnings record while I was on the phone and showed me that my projected retirement benefits were exactly the same as before I started collecting EDD. The only retirement impact is what others mentioned - missing out on 401k contributions while unemployed. At 58 with decades of work history, you have nothing to worry about regarding Social Security. Focus your energy on the job search instead of stressing over something that isn't even a real issue!

I'm so glad you asked this question because I had the exact same fears when I got laid off from my retail management job at 56! Like others have said, unemployment benefits absolutely do not affect your Social Security retirement benefits - they're completely separate systems. What really helped me was creating a my Social Security account online at ssa.gov and actually looking at my projected benefits. You can see your complete earnings history and estimated retirement benefits, and it really drives home that unemployment doesn't factor into the calculation at all. The Social Security system uses your highest 35 years of earnings, so if you've been working steadily for decades like it sounds you have, a few months or even a year of unemployment won't make a meaningful dent. The real impact is just the temporary pause in building your 401k/retirement savings, but that's manageable. Don't let this worry keep you up at night - focus on finding your next opportunity instead!

I'm a financial advisor and I see this question come up frequently with clients who are nearing retirement and find themselves unexpectedly unemployed. The short answer is no - collecting EDD unemployment benefits will NOT affect your future Social Security retirement benefits in any way. These are completely separate government programs with different funding mechanisms and eligibility requirements. Social Security retirement benefits are calculated based on your lifetime earnings record (specifically your highest 35 years of earnings where you paid into Social Security), while unemployment insurance is a temporary income replacement program funded through employer taxes. The only potential retirement impact from a period of unemployment is the temporary interruption in employer-sponsored retirement plan contributions (401k, 403b, etc.) and any employer matching you might miss out on during this time. Given that you're 58 with decades of work history, a few months of unemployment will have virtually no impact on your Social Security calculation. I'd recommend creating a my Social Security account online to review your earnings record and projected benefits - this will give you concrete reassurance that your retirement security remains intact.

I'm 54 and went through this exact same worry when I got laid off from my construction job about 8 months ago. I was absolutely convinced that collecting unemployment would somehow mess up my Social Security benefits down the road. After doing tons of research and even speaking with someone at the Social Security office, I can tell you definitively that unemployment benefits have ZERO impact on your future retirement benefits. They're completely separate systems - Social Security is based on your lifetime earnings where you paid SS taxes, while unemployment is funded by employer taxes to the state. What really put my mind at ease was logging into my Social Security account online and seeing that my projected benefits were exactly the same as before I started collecting EDD. After 40 years of steady work, a few months of unemployment is basically invisible in the calculation. The only real impact is missing out on 401k contributions during this time, but that's not the end of the world. Don't stress about this - channel that energy into your job search instead!

I'm 52 and was laid off from my accounting job three months ago, and I had this EXACT same fear! I was losing sleep thinking that collecting unemployment would somehow reduce my Social Security benefits. After weeks of worrying, I finally called the Social Security Administration directly (yes, it took forever to get through) and spoke with a representative who explained it perfectly: unemployment insurance and Social Security are completely separate systems that don't interact with each other at all. Unemployment is funded by employer taxes to the state, while Social Security comes from the payroll taxes you've already paid throughout your career. She even told me that she gets this question multiple times per day because it's such a common misconception! The rep was able to look up my earnings record right there on the phone and confirm that my projected retirement benefits hadn't changed one bit despite being on EDD for months. At our age with decades of work history, these temporary gaps in employment are essentially invisible in the Social Security calculation. The only retirement impact is missing out on 401k contributions while unemployed, but that's a separate issue entirely. Don't let this worry consume your energy - focus on your job search and rest easy knowing your retirement benefits are completely safe!

I'm 55 and went through this exact same panic when I got laid off from my manufacturing job last year! I was absolutely convinced that collecting unemployment would somehow hurt my Social Security benefits later. After doing extensive research and even meeting with a financial planner, I can confirm what everyone else is saying - unemployment benefits have ZERO impact on your future Social Security retirement benefits. They're completely separate systems funded differently. What really helped ease my mind was creating a my Social Security account online at ssa.gov and actually seeing my projected benefits and earnings history. After 35+ years of steady work, a few months of unemployment didn't even register in the calculation. The only real retirement impact is missing out on 401k contributions and employer match while you're between jobs, but that's temporary and manageable. At 58 with decades of work history, you have absolutely nothing to worry about regarding Social Security. Focus your energy on the job search instead of stressing over something that isn't even a real problem!

I'm 60 and was in your exact situation about 6 months ago - laid off from my supervisor position at a packaging company and terrified that unemployment would mess up my retirement plans. I spent weeks researching this and even called AARP's helpline to get clarification. The answer is definitively NO - unemployment benefits will not reduce your Social Security retirement benefits in any way. They're completely separate programs with different funding sources. Social Security is calculated from your highest 35 years of earnings where you paid SS taxes, and unemployment doesn't count as earnings for this calculation. What helped me most was actually creating the my Social Security account online and seeing that my projected benefits stayed exactly the same throughout my 5 months on EDD. With your 40 years of work history, a few months of unemployment won't even be a blip in your Social Security calculation. The only real impact is the temporary pause in retirement savings contributions, but that's manageable. Don't let this worry steal your peace of mind - you've got enough stress with job hunting. Your retirement security is intact!

I'm 57 and went through this exact same fear when I got laid off from my office job about 4 months ago! I was convinced that collecting EDD benefits would somehow reduce my Social Security payments when I retire. After losing sleep over it for weeks, I finally did what several others here mentioned - I created a my Social Security account at ssa.gov and looked at my actual projected benefits. Even after being on unemployment for months, my estimated retirement benefits were exactly the same as before I lost my job. It really drove home what everyone's saying - these are completely separate systems that don't affect each other at all. The Social Security calculation is based on your lifetime earnings where you paid SS taxes, not on whether you collected unemployment at some point. With decades of work history like you have, a temporary period of unemployment is basically invisible in the calculation. The only real impact is missing out on 401k contributions while you're between jobs, but that's not permanent damage. Don't waste your energy worrying about this like I did - put it all into your job search instead. Your retirement benefits are safe!