Old-Age, Survivors, and Disability Insurance

What is the Old-Age, Survivors, and Disability Insurance (OASDI) ?

The federal Old-Age, Survivors, and Disability Insurance program is the official name for Social Security in the United States. The most important component of the Social Security Disability program is OASDI. It is intended to provide ongoing income for persons who are retired, Social Security Disability beneficiaries, and the surviving spouses and dependent children of workers who have passed away.

The OASDI program provides monthly benefits to qualified retired and disabled workers and their dependents and to survivors of insured workers. The program's objective is to partially replace income that is lost as a result of old age, the death of a spouse or ex-spouse who qualifies for benefits, or disability. The amount of Social Security contributions made by the worker determines eligibility and benefit amounts. Although there is a cap on the amount of money that can be obtained from working for those who are younger than the full retirement age, there is no means test to qualify for benefits.

Under the Federal Insurance Contributions Act and the Self-Employment Contributions Act, payroll taxes are used to pay for OASDI. FICA taxes are subtracted from employees' paychecks as contributions. Almost everyone who earns a living pays taxes into the OASDI program, and those who meet the age or disability conditions are eligible to receive benefits from it. How much an individual contributes to OASDI over the course of their lifetime influences the amount they are eligible to receive in retirement.

Key Facts of OASDI Program

  • The official term for Social Security is the government OASDI program.
  • Benefits are provided by the Old-Age and Survivors Insurance program to retired employees, the dependent family members of retired employees, and the survivors of deceased employees.
  • The program is financed through OASDI taxes, sometimes referred to as FICA payroll taxes.
  • A person's monthly payment is determined by how much they made during their working years.
  • The purpose of OASDI programs is to "insure" that a family will not lose any income in the event that a worker retires, passes away, or becomes disabled.

How Does the OASDI Program Works ?

President Franklin D. Roosevelt signed the Old-Age, Survivors, and Disability Insurance Act into law in 1935, and the government started levying taxes to pay for the program in 1937. The program's goal was to partially replace the income of retired or incapacitated people, as well as the income of their surviving family members. At first, the program was only available to senior citizens. A 1939 amendment added dependents and survivors; a 1956 amendment added disabled people.

Payroll taxes paid by employees, employers, and self-employed individuals support the OASDI program. As of 2023, the OASDI tax is 6.2%. Only the first $147,000 of your income is subject to the tax, so in 2022, an employee's maximum necessary contribution will be $9,114.00. Employers must match employee contributions in full. This means that for every $1 you contribute, your employer also contributes a dollar.

For those who are self-employed, the tax is applied somewhat differently. These people must pay both portions of the OASDI tax because they are both the employer and the employee in the situation. It wasn't always like this. The first year when self-employed employees paid OASDI taxes was 1951, and it wasn't until 1984 that their contributions were double those of officially employed workers.

The government distributes OASDI benefits to recipients each month. A beneficiary is a person who is eligible for some benefits under the Old-Age, Survivors, and Disability Insurance program.

The four acceptable standards for allocating OASDI trust monies are listed in Cornell Law's Social Security Bulletin :
  • Benefits paid to employees and their families each month.
  • Services for people with disabilities in vocational rehabilitation.
  • Expense of administration (currently less than 1 percent of expenditures).
  • Payout in one lump sum to qualifying survivors upon death.
In order to maintain the integrity of the program, the government does not permit any other withdrawals from the OASDI trust funds.

Who is Eligible for Old-Age, Survivors, and Disability Insurance Program ?

People who are disabled or retired can be eligible for Old-Age, Survivors, Disability Insurance. The OASDI program has no income limitations.

The length of your employment history or, if you are a survivor, the length of your spouse's or parent's employment history, determines your eligibility for OASDI. Depending on the claimant's age, a sliding scale applies to the time requirement.

OASDI Benefits Eligibility Requirements :

1) Old Age :
A worker must be 62 years or older to be eligible for the Old Age (OA) component of OASDI. If these workers choose to begin receiving benefits at age 62, they are eligible for half benefits. Depending on the year of birth, employees can begin receiving full benefits between the ages of 65 and 67. A person must be 65 years old to be eligible for full benefits if they were born before 1950. Benefits can be started at age 66 for employees born between 1950 and 1960. Those who were born after 1960 can start receiving benefits at the age of 67.
Another point to consider is that non-working spouses may be entitled to up to half of the benefit received by the working spouse. In general, the amount of money in the OASDI reserve that is available will determine when a worker becomes eligible to receive benefits.

2) Survivors :
Upon the death of a working parent or spouse on whom they are dependent, beneficiaries of the Survivors portion of OASDI are eligible to receive benefits. The sum is determined by the worker's length of employment, which helped fund the OASDI account. often qualified for OASDI benefits covering half of their salary. Payments for survivors are given to the surviving spouses or qualified children of deceased or retired workers.

3) Disability :
The only part of the OASDI program that can be accessed before getting old or passing away is disability benefits. Workers must demonstrate their disability in order to be eligible for Disability Insurance (DI). They must be unable to work because of their condition in order to provide for their families or themselves. To qualify for Social Security Disability benefits, you must have a total disability and be unable to perform any type of employment. Before reaching retirement age, you could be able to receive OASDI if you are eligible for SSD benefits. Before they reach retirement age, those who meet Social Security Disability guidelines may be eligible to receive OASDI.

Old-Age, Survivors, and Disability Insurance Payroll Tax

The Federal Insurance Contributions Act (often known as FICA taxes) and SECA (Self-Employed Contributions Act) taxes, which are payroll taxes that the government collects, are used to support payments to qualified individuals. The Social Security tax rate for employees in 2023 and 2024 is 6.2%, while the rate for self-employed individuals is 12.4%.

Two trust funds are used to hold these receipts:
  • The retirement-related Old-Age and Survivors Insurance (ASI) Trust Fund
  • The disability trust fund for disability insurance (DI)
The benefits are distributed by these trust funds, and the remaining money is put to investment.


The OASDI program of Social Security places a cap on the annual amount of wages that are subject to taxation. While those earnings are taken into account when calculating benefits, the same yearly cap also applies. Each year, the national average pay index varies, which causes modifications in this cap. The contribution and benefit basis is capped annually. The term "taxable maximum" is also frequently used to describe this sum. This basis amounts to $147,000 for profits in 2022.

The statutory OASDI tax rate for wages earned in 2022 is 6.2 percent for both employers and employees. In 2022, a person whose salary is equal to or greater than $147,000 would pay $9,114.00 into the Old-Age, Survivors, and Disability Insurance program, and so would his or her employer. In 2022, the OASDI tax rate on self-employment income will be 12.4%.

How to Calculate OASDI Benefits ?

The 35 years of employment with the greatest wages are used to determine an individual's Old-Age, Survivors, and Disability Insurance payments. The Social Security Administration calculates how much that sum would be worth in today's money and then applies a formula that considers the individual's anticipated timing of benefit receipt, among other things.

How Much is Old-Age, Survivors, and Disability Insurance ?

Based on how long the employee worked and how much he contributed to the Social Security Disability Insurance program, the amount of Social Security Disability benefits that are available to those who become disabled, or Old-Age, Survivor benefits for those who retire or lose their wage-earning spouse or parent, are determined. The average monthly benefit that participants will receive in 2023 is $1,827.
6.2 percent for OASDI (5.015 percent for OASI and 1.185 percent for DI) and 1.45 percent for HI are the current FICA tax rates that apply to both employees and employers. Self-employed people are subject to SECA's combined employee-employer rate of 12.4 percent for OASDI and 2.9 percent for HI.
The amount of Social Security payments that a retired person can receive is capped. The maximum monthly payout for someone applying to get benefits at age 62 in 2022 is $2,364. The maximum monthly income is $3,345 for someone applying in 2022 at full retirement age (66 for those born between 1943 and 1954). The maximum monthly benefit for a 70-year-old applicant is $4,194. Remember that nobody is in any way obligated to pay the sum. In actuality, in 2021, the average monthly Social Security income for retirees was only $1,555.

How to Apply for Old-Age, Survivors, and Disability Insurance Program ?

You might be able to apply for OASDI benefits with the aid of a lawyer or disability advocate. They can make sure that you correctly complete your application and attach the required materials.

OASDI Program FAQs

What does OASDI stand for ?
The Old-Age, Survivors, and Disability Insurance Program is known as OASDI.

What is the OASDI's purpose ?
This system's goal is to partially make up for income lost as a result of disability, old age, or the death of a qualifying ex-spouse or spouse.

How was the Old-Age, Survivors, and Disability Insurance Program started ?
The Social Security Act of 1935, which was signed by the then-president Franklin Delano Roosevelt, served as the foundation for the program. In order to keep up with changes in the US population and economy, the program has expanded throughout time.

How is the Old-Age, Survivors, and Disability Insurance funded ?
OASDI taxes, which are a subset of the FICA taxes, or Federal Insurance Contribution Act taxes, are responsible for funding payments. The old-age and survivors insurance (ASI) trust fund for retirement and the disability insurance (DI) trust fund for disability each hold a portion of this earnings. These funds distribute their benefits while investing the remaining money they receive.

Is OASDI tax mandatory ?
All employees, employers, and independent contractors must pay Old-Age, Survivors, and Disability Insurance taxes. You cannot choose not to pay OASDI taxes, regardless of how much you would prefer to save on your own behalf for retirement. There are relatively few exceptions; around 96% of occupations are covered by OASDI, meaning you must pay in and eventually be eligible to get benefits.

The following groups are not qualified to receive those benefits in retirement since they are exempt from paying OASDI taxes :

1) Some religious groups :
Members of some religious organisation, such as the Amish and Mennonites, are able to request an exemption from paying OASDI taxes because they are against taking Social Security benefits.

2) Non-resident aliens :
Even though they hold a green card or visit the country for a certain number of days each year, some people who live in the US but aren't citizens or residents are nevertheless required to pay OASDI taxes. Others don't, like visiting academics from abroad and students from other countries.

3) Students :
Students who work on campus are exempt from paying OASDI taxes on their earnings.

4) Workers of foreign governments :
Income obtained by a foreign government employee while performing official duties is exempt from OASDI taxes.