9/16/2011 5:16 PM ET|
Double-dip retirees get jobless pay
Who knows how many Americans have been pushed into retirement by layoffs? As the US economy struggles, the government is supplying some with 2 income streams.
Can you be unemployed and retired . . . and collect benefits for being both?
One New York woman who was laid off in 2009 after a 40-year career in philanthropy filed for unemployment while continuing to look for a new job. A year later, at age 65 and jobless, she applied for Social Security retirement benefits. She now collects both a monthly Social Security check and weekly unemployment benefits totaling nearly $3,000 a month, as well as a pension she earned during her career.
With the nation's fragile economy leaving millions of older workers unemployed, growing numbers of these Americans are double dipping -- collecting unemployment insurance benefits, which extend for 99 weeks, and Social Security benefits. Or, in the case of government workers, collecting unemployment benefits and state, local or federal pensions. Double-dipping is not illegal. And many would feel like suckers if they didn't take advantage of all the benefits that are available to them through the federal and state governments. But, is this any way to run a country at a time of fiscal crisis?
As long-term unemployment sets records -- 6.2 million out of work for at least 27 weeks and 2 million jobless for more than 99 weeks -- the line between unemployment and retirement is blurring. About 2.1 million of the nation's 14 million unemployed are 55 or older, although this probably underestimates the number who have retired due to joblessness. Some are so desperate for income that they are turning to multiple benefit streams just to make ends meet. Others are simply taking advantage of cashing in on the extended unemployment benefits. But the generous length of unemployment benefits may actually have backfired by extending joblessness, not just benefits, and ultimately fueling the so-called "jobless recovery."
"There is no conflict between collecting a Social Security pension benefit and unemployment compensation at the same time, as long as each agency is apprised of the income received from the other," says James Cushing, a Pennsylvania lawyer specializing in unemployment compensation. A little more than half of the 14 million Americans officially counted as unemployed collect UI benefits, and about one-tenth of these are eligible for Social Security retirement benefits, according to the Bureau of Labor Statistics. The federal-state UI program administered by the states, paid out more than $160 billion last year.
The ease of electronic filing for unemployment benefits has changed the game. Are people really looking for work when they click once on Monster.com to see if there's a job in their area of expertise? Although the software does ask whether one is receiving private pension income, the long lag time for agencies to cross-check applicants' income makes it possible for unemployed, retired Americans to draw significant benefits that may actually be a disincentive to finding work. Still, most of the UI system's estimated $17 billion in annual fraud instead results from people who are working and claiming benefits.
|Why working doesn't pay|
|Ages 62-65||Working vs. UI and Social Security|
|Weekly income||Salary: $1,000|
|Less forgone benefits||$750 (Average $450 a week for unemployment, $1,200 per month for Social Security|
|Less extra taxes||$114 ($76.50 in SS on $1,000, plus 15% of the extra $250 per week, or $37.50)|
|Incremental net income from working||$136 ($1,000 minus $750 minus $114)|
|Effective tax rate on working||86.4% (The sum of incremental taxes and lost benefits)|
Assumptions: The individual is a middle manager making $1,000 per week. Unemployment benefits are based on an individual working for 35 years or longer, earning between $50,000 and $75,000.
The entitlement seduction
Americans typically turn to government benefits as their first recourse when times are tough. For example, many unemployed workers who exhaust their UI benefits file for disability. In fact, the number of beneficiaries of Social Security Disability Insurance has risen by 67% since 2000, even though the workforce has grown by only 10%. People diagnosed with osteoarthritis, one of the most common conditions among people 55 and over, can probably get away with claiming disability even though they're perfectly capable of walking, typing and handling most nonphysical jobs.
Although most experts doubt that UI abuse is widespread, Dalmer Hoskins, the director of the program studies division at the Social Security Administration, said, "By the time that record gets to SSA, it could be a year or two. So there is room for fraud. It is then up to the UI system to go after them. But, if someone moves from state to state, I doubt how vigorously it can be tracked."
The temptation to draw upon two or more benefit programs is particularly great for unemployed workers in their early-to-mid-60s. This calculus plays in the mind of Cindy White, a 60-year-old association management professional who has been out work and collecting unemployment since December 2009.
"I'm too old to be hired and too young to be retired," she said before a meeting of the 40-Plus group for older, long-term unemployed workers in Washington, D.C. "If I didn't have enough current income I'd consider going on Social Security when I turn 62. When you hit 60, your options narrow so much."
Although Social Security and UI are social insurance programs intended to respond to different, even contrary, needs, the relative lack of coordination among benefit programs allows more and more Americans to draw benefits from both simultaneously. These programs are also straining federal and state budgets. The average Social Security pension benefit is about $1,200, a month (and could be considerably higher for high lifetime earners), and the average unemployment benefit is about $300 a week. More than 5 million Americans 55 and older collect UI, workers' compensation, or veterans' benefits, and 42 million collect Social Security benefits, according to the Employee Benefit Research Institute. However, neither the Institute, the Department of Labor, nor the SSA disaggregate data to count how many receive both Social Security and unemployment compensation.
While most fraud occurs when individuals collect UI while working or when they collect Social Security Disability Insurance when they are able-bodied, eligibility to claim both UI and Social Security actually has been expanded in recent years. Because unemployment compensation is a federal-state program, each state can set its own terms for benefits, and all but five states allow an individual to collect a full Social Security pension and UI. However, in Illinois, Louisiana, South Dakota, Utah, and Virginia, 50% of the monthly Social Security retirement benefit, converted into weekly terms, is subtracted, or "offset," from unemployment benefits.
"Over the last 15 to 20 years, states have been moving to allow full retirement benefits while collecting UI," Wayne Vroman, an Urban Institute economist, said. "The elderly lobby has been reasonably successful in getting rid of offsets." Nearly 20 states have repealed their offsets since 2002, although Virginia reinstated its offset last year because of budget shortfalls.
This long-term change in public policy regarding Social Security pensions and UI -- which enables double-dipping -- has occurred because "unemployment policy experts assert that it is good for the economy for older workers to stay in the labor force, qualify for unemployment, and be encouraged to go back to work," Hoskins said.
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Since when has the Government "given" anyone their Social Security? I, for one, have paid into it - as have all of my past employers -- for over 47 years! I would have had a MUCH larger amount saved if it would have been placed into an IRA type plan -- instead of the hands of our spendthrift Congress!!! And, let's not get into the part about Congress giving this money away to people who not only did not work for it, but many of whom are not even citizens of this country!
Oh, and as far as Unemployment goes -- isn't it Unemployment INSURANCE? I believe that all of my employers paid into that plan also. After being forced to do so by -- Again- - our Government. This money too could have been used as pay raises for the employee.
Neither of these programs are "Gifts". Both have been abused and poorly operated by --AGAIN - - our Government!!! So don't now try to switch the blame onto the Citizen who is drawing these "benefits" Place the blame where it belongs -- ON THE CONGRESS!!
This is not double dipping but rather a return on paid investment’s, both mandated by the Government. Unemployment Insurance and Social Security are not Government Welfare programs but prepaid insurance programs. As I have paid the required insurance premiums for unemployment and social security. Why shouldn’t I receive what I have paid for?
Take a better look at your paycheck stubs. I think you'll notice there are deductions every pay period for both Social Security AND unemployment. In my state, the employer pays half and the employee, the other half. Should those payroll deductions just vaporize then?
So, let's look at the cost of living next. How in the world is $3,000 a month an extravagant income? Isn't it odd how the hotchas with the most money look at anyone collecting $3,000 a month in SS and SUI as if they are Madoff?
This is how this country got into this mess. Rich butts who love their wads and wads of money and are the first to deny someone else a lousy $3,000 a month to live on. After, rent or mortgage, food, gasoline and utilities all of which make the rich richer and then add to that taxes, anyone who can live on less is a magician.
Tell rich butts to stuff it.
It is OK to hire the illegals, allow them to work for cash...no taxes paid to support all the services they are allowed (no, encouraged) to abuse, educate their children with ours, set the standard that it is fine to come here and openly break the laws of the land, sue us for discrimination if we try to stop the abuse, flood the country with illegal drugs, send all the US dollars to their own country, take no oath of allegiance as is required of someone entering legally, force us to learn their language....I think you get the picture.
I would rather pay a citizen who needs the income and is double dipping (as the author says...legally) than to pay the billions we spend supporting the undocumented immigrants. I would support a means test for the citizen, but would enthusiastically support deportation and locking the border for illegal... sorry, undocumented individuals!!
I was laid off and collected UI until the end. At 62, I was too old to be hired and was forced to go on Social Security or starve. I am now working part time, but the income levels that I can earn are less than my UI benefits. Is this fair to us older people that have worked all our lives? I would really like to work full, but can't.
The person who wrote this article doesn't know what he's talking about.
First of all, all income - including Social Security income - would have to be declared before receiving benefits and the unemployment insurance would be reduced by a proportional amount. The only way a person is going to collect full benefits is if that person fails to reveal additional sources of income, a violation of law.
Secondly, for the last 25 years, the United States government has been cheating millions of Social Security recipients out of up to 60% of their EARNED benefits due to the unfair WEP and GPO laws. If a person has paid into two separate retirement systems, that person should receive the full benefits of each. The Reagan administration changed the rules after people had been paying into Social Security for decades. How fair is that?
If you have a private retirement system or a 401K, do you honestly believe that your Social Security benefits should be reduced by up to 60% and you be falsely accused of "double dipping"– especially after the Social Security system has been accepting your Earned Contributions for decades? Are we now going to be means tested, and if our government deems we have worked and earned “too much” during the course of our lives, than have our Earned Social Security Benefits reduced or completely eliminated? And how can you trust a government that changes the rules you’ve fairly played by just before you’re ready to retire?
Our government's Social Security rules changes mid-stream have thrown many of our senior citizens into poverty. The average Social Security payment is around $1,100 per month but tens of thousands of retirees effected by Reagan's WEP & GPO laws earn far less than even $1000 per month because their EARNED benefits were unfairly reduced. Try living on that pittance in your "golden years."
Bills to repeal the WEP & GPO laws are never even voted on by our cowardly congress. That's because whenever a bill to repeal these unfair laws they are tied up in committee and never see the light of day. In other words, our congress plays games while seniors are forced into poverty by the hidden taxes known as WEP and GPO.
Our congress people are now whining that they can't live on their $174,000 per year salaries, yet they have no trouble sleeping at nights when America's senior citizens can't buy food or medicine due to our nation's corrupt Social Security laws. We can’t afford to pay seniors the benefits that they actually EARNED but we can afford to give away billions to foreign banks and squander over FOUR TRILLION DOLLARS in Iraq and Afghanistan.
Let's look at the real causes of our nation's debt and quit blaming the Social Security system for our out of control military spending, bank bailouts and foreign aid.
So, if I still work at age 65, and lose my job, I shouldn't be eligible for unemployment? If so then why do they continue to collect the charge from my employer? If the government would stop collecting this fee it would save employers millions! Just think all of those over 65 would be desirable to employers!
WHAT A LOAD OF CRAP!!! Those 65 and over worked for 45, or more, years and were forced to pay into their Social Security! There should not be ANY restrictions on it when they draw it out!
The problems we are now facing on Social Security were caused by CONGRESS! THEY got their greedy hands on the money and used it to buy votes!! They gave it out to those who did NOT work and pay into it -- in fact many are not even legal citizens! Now, it's time to pay the piper and -- Surprise - they want to lay the blame on everyone else.
I worked for over 36 years on a steel shop. A company from baltimore bought the company and let everybody go for about two years. After all that time they call everybody back to work
but we had to take a 40% pay cut and contribute more that $80.00 dollars a month toward the
health benefits, in other words we will be working for just about $8.00 an hour. After i was
making over $20.00 dollars an hour i rather decided to retire and took my steel worker pension at 60. Now i pay for my health insurance and relax until i qualify for my social security and medicare.. God Bless America....
America would be more prosperous if we had more incentives to work and fewer incentives not to work.
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