What Is the Old-Age, Survivors, and Disability Insurance (OASDI) Program?
You know it as Social Security, but its official name is the Old Age, Survivors, and Disability Insurance (OASDI) program. This federal system in the United States delivers income support to retirees, people with disabilities, and their families, all funded by the payroll taxes you see deducted from your paycheck.
The core purpose here is straightforward: it partially replaces income lost because of retirement, the death of a spouse or qualifying ex-spouse, or a disability. As someone who's likely paying into it, you should understand that OASDI covers benefits for retired adults, disabled individuals, and their spouses, dependents, or survivors.
How the Old-Age, Survivors, and Disability Insurance (OASDI) Program Works
Let me take you back to the origins. The Social Security program, encompassing both retirement and disability benefits, started with the Social Security Act signed by President Franklin D. Roosevelt on August 14, 1935, right in the middle of the Great Depression. Since then, it's expanded enormously alongside the U.S. population and economy.
In 1940, just 222,000 people got an average monthly benefit of $22.60, but by January 2025, that average is $1,976, with annual reviews and inflation adjustments. This makes it the world's largest system of its kind and the biggest item in the federal budget, at about $1.4 trillion in 2024. Nearly 90% of those 65 and older receive these benefits.
Your benefit amount comes from your average indexed monthly earnings (AIME) over your 35 highest-earning years. And remember, recipients get a 2.5% cost-of-living increase in 2025, following 3.2% in 2024.
OASDI Payroll Tax
These benefits are paid for through OASDI taxes, which are payroll deductions under FICA for employees or SECA for the self-employed. Employees pay 6.2% on their wages, while self-employed folks cover the full 12.4%. When you add Medicare, it's 7.65% total for employees and 15.3% for self-employed.
The money goes into two trust funds: the Old-Age and Survivors Insurance (OASI) Trust Fund for retirement and the Disability Insurance (DI) Trust Fund for disabilities. These funds handle payouts and invest what's left. There's a cap on taxable earnings—$168,600 in 2024, rising to $176,100 in 2025—so income above that isn't taxed for OASDI.
OASDI Program Criteria
To get these benefits, you have to meet specific rules. For retirement, payments can start at 62, but full retirement age is 67 if you were born in 1960 or later. If you delay until 70, you earn higher benefits through delayed retirement credits.
Benefits depend on your past wages. Survivors get payments if they're spouses or dependents of deceased workers, and disability benefits go to those who can't do substantial gainful work and meet other standards. To qualify for retirement, you need to be fully insured with 40 credits, earned at one per $1,810 in 2025 (up from $1,730 in 2024), with a max of four per year.
Common Questions About OASDI
Is OASDI tax mandatory? Yes, federal law requires it on income up to $176,100 in 2025 for workers and employers.
At what age are Social Security payments no longer taxed? Actually, a portion can be taxable at any age unless your income is very low—below $25,000 for individuals or $32,000 for couples; otherwise, up to 85% might be taxed based on your total income.
How can you avoid paying OASDI tax? Exemptions are rare, like for certain clergy or nonresident aliens, but if you're exempt, you can't collect benefits either.
The Bottom Line
In essence, the OASDI program is what you call Social Security—covering retirement for you and your surviving spouse, plus disability income. You fund it with 6.2% of your income (or 12.4% if self-employed) up to the annual cap, and in return, you get benefits adjusted for inflation based on your work history.
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