April 16, 2020
CARES Act: How to File for Unemployment Benefits
Nearing retirement but now you’re unemployed? You can still achieve your retirement goals. Here’s how you can claim benefits and get by until you find your next employer.
As jobless claims continue to skyrocket, millions of Americans are facing a new danger of not receiving a paycheck during this global pandemic. For those approaching retirement, many have been taking this opportunity to maximize their retirement savings and aggressively pay down debt. However, if you’re recently unemployed and approaching retirement, don’t worry. We’ll show you how to file for unemployment benefits under the CARES Act to help reduce some worries about your future retirement.
Unemployment Benefits Through the CARES Act
Unemployment benefits are typically offered by states as temporary payments to those who have lost their jobs through no fault of their own. Typically, states offer between 13 to 26 weeks of benefit payments with the average weekly payment being $385.
The recently passed CARES Act expands these benefits in a few key ways.
- The benefit amount increases up to $600 per week in addition to the typical benefits offered by states.
- The benefit period extends by 13 weeks.
- Those that are self-employed or independent contractors are now eligible for benefits through the program.
How to File for Unemployment Benefits
While the new law provides federal assistance, unemployment benefits will still be administered through various state unemployment programs. Many states offer the ability to apply online or by phone. You can locate your state’s unemployment office information by visiting the Department of Labor’s career site at careeronestop.org.
Many states are experiencing a large number of claims, therefore you may not receive as much guidance from your individual office. The process of filing for benefits can be time-consuming but can be easily achievable through the online application. Before you apply, be sure you have the necessary information available such as:
- Social Security Number
- Drivers License or State ID number
- Current Address and Phone Number
- Names and Addresses of Recent Employers
- Employer ID Number or EIN (This can be found on your most recent W-2 document)
Evaluate Your Savings to Pay for Expenses
Consider the flexibility that can come from existing savings accounts and retirement accounts. While now is not the ideal time to pull from investments, they may provide a source of temporary funding to pay your monthly expenses. Typically, you are not able to withdraw from your retirement accounts before age 59 ½ without paying a penalty. The CARES Act allows anyone under the age of 59 ½ to access their accounts penalty-free but there are some important tax implications that you should understand. Also, you could consider using your emergency fund now but don’t forget to replenish it for the future. If you are nearing retirement, a major asset is your primary residence. You may also consider using the equity in your home to set up a line of credit or refinance your mortgage to help with short-term funding needs.
Consider Filing for Social Security
If you’re age 62 or older, you can file for Social Security and start collecting your monthly benefits. However, if you start taking benefits before reaching your full retirement age, which is 66 or 67, you will face a reduction in payments that will remain in effect for the rest of your life.
This should be considered if you have no other savings to draw from and are in desperate need of income. The decision to take your benefits early could mean a loss of thousands of dollars during your retirement years.
You are allowed to receive unemployment benefits in addition to income from Social Security. However, you should check with your state to see how your Social Security income affects your unemployment benefits.
Pay Attention to Your Health Benefits
Losing your job can also mean losing your health benefits. It may be tempting to forgo this expense during difficult times, however, coverage is critical to your health and savings. With a global pandemic, it’s extremely important to have coverage. Many insurances like Aetna, Cigna, and Humana are covering COVID-19 testing and treatments. Consider enrolling in COBRA to continue your employer coverage or consider getting coverage using the health insurance marketplace. If you are 65 or over, you should consider applying for Medicare benefits to avoid a catastrophic health care event.
Try to Reduce Spending
If you are facing a loss in income, now is a good time to look at reducing your spending. Creating a budget can help you reprioritize your spending based on your goals and values. One of the easiest ways to reduce your spending is to reconsider monthly subscriptions and services. Discontinue any subscriptions or services you are not using. You can also negotiate with your utility providers to get a better rate. Another way to save is by contacting your creditors. Negotiating new rates on your debt or possibly suspending your repayment temporarily can go a long way to stretching your savings.
Opportunities for Extra Income
Those that are near retirement typically have amassed valuable skill sets that can be used for extra income during this time. Part-time or contract-based income can be helpful to reduce the financial burden. This can include everything from consulting or teaching. New opportunities have popped up in recent weeks that allow those with knowledge and experience to contribute to society. You should weigh the pros and cons of these opportunities. The income you earn will likely affect the unemployment benefits you have applied for. However, unemployment benefits are not indefinite. You can continue collecting benefits to earn income until those unemployment benefits run out.
Keep in mind that most periods of unemployment are temporary in nature. By following these tips, it can help you navigate through uncertain times and allow you to stay on track with your retirement plan.