Dear Retirement Adviser, My company is giving me a severance package with five months' pay. At age 66, I am collecting Social Security and will get a small pension from my company. Is it possible to collect unemployment, even while I am getting my monthly package and retirement?
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Thanks, -- George Gatherum
Dear George, Your state administers the unemployment insurance program, and the laws vary state by state. The premise of unemployment insurance is that you are actively looking for work. If you're just looking for a check and not actively seeking a job, that will be an impediment to receiving unemployment compensation, also known as UC.
For example, in my home state of Pennsylvania, being on the receiving end of a severance package helps determine the exact amount of unemployment compensation. Social Security benefits are not deducted from unemployment benefits. Private pension benefits, however, may reduce these unemployment benefits. A lump-sum pension payment is not deducted from unemployment compensation unless you had the option to take pension payments monthly. If you roll over the lump-sum payment into an eligible retirement plan, however, it doesn't reduce your unemployment compensation.
It's pretty easy to find out more through your own state's Department of Labor website. Then, you can decide whether it makes sense for you to pursue a claim for unemployment compensation at the actual end of your professional career.