The COVID-19 crisis has sparked an uptick in unemployment claims, with millions of Americans filing over the past two weeks and many more likely to file during April. If you've lost your job due to no fault of your own -- meaning, you weren't fired for cause -- and you meet the earnings requirements in your state, you'll generally be eligible to collect unemployment benefits. But what if you're working and collecting Social Security simultaneously? Will you still qualify for unemployment, or will one set of benefits prevent you from collecting another?

Can you double dip?

Your weekly unemployment benefit is based on your state's benefit rate coupled with your recent wage history. Meanwhile, your Social Security benefits are calculated based on how much you earned during your 35 highest-paid years in the workforce. You're entitled to your full monthly Social Security benefit based on your income history once you reach full retirement age, which, depending on the year you were born, is 66, 67, or 66 and a certain number of months.

Older man at computer typing on keyboard


Now you're allowed to file for Social Security as early as age 62, but for each month you claim benefits before full retirement age, they get reduced on what's generally a permanent basis. Meanwhile, you're also allowed to earn money from a job and receive Social Security benefits, but if you do so prior to reaching full retirement age, you'll risk having a portion of your Social Security income withheld if your work income exceeds what's known as the earnings test limit.

With that in mind, here's the good news: You can, in fact, file for unemployment if you're already collecting Social Security. In the past, some states would reduce your unemployment benefits if you were receiving Social Security at the same time, but that's no longer the case, as all states have eliminated that practice. And on the flipside, unemployment benefits are not counted as wages toward the Social Security earnings test limit, so those weekly payments won't cause you to lose out on other money you're entitled to.

Should you claim Social Security if you've been laid off?

Though unemployment benefits will put some money back in your pocket, they won't replace your entire paycheck -- though if you file right now, you'll be entitled to an extra $600 a week as part of the COVID-19 relief package that was recently approved. You may be tempted to claim Social Security to make up the difference. But before you do, remember that filing prior to full retirement age will result in an automatic reduction in your monthly benefits, and that's a hit that could really hurt you on a long-term basis. This especially holds true if you don't have much in the way of retirement savings.

Therefore, while it may be tempting to claim Social Security right after getting laid off, it also pays to wait until your unemployment benefits come through and see if they suffice in paying your bills. If so, you can at least delay your Social Security filing until your unemployment benefits run out.