Unlocking Financial Security: Old-Age, Survivors, and Disability Insurance (OASDI) Program


The Old Age, Survivors, and Disability Insurance (OASDI) program, commonly known as Social Security, is a comprehensive federal benefits program in the United States. It provides financial support to retired adults, individuals with disabilities, surviving spouses, children, and beneficiaries. This article explores the program’s history, funding through OASDI taxes, eligibility criteria, and its role in providing essential income to millions of Americans.

What is the old-age, survivors, and disability insurance (OASDI) program?

The Old Age, Survivors, and Disability Insurance (OASDI) program, often referred to as Social Security, constitutes a federal benefits initiative designed to alleviate financial challenges for retired adults, individuals with disabilities, surviving family members, and beneficiaries. The program aims to bridge income gaps resulting from old age, disability, or the loss of a spouse.

Understanding the old-Age, survivors, and disability insurance (OASDI) program

The inception of the U.S. Social Security program took place with the signing of the Social Security Act on August 14, 1935, during the Great Depression. Since then, the program has grown alongside the U.S. population and economy, offering a crucial safety net for millions.

Over the years, the number of beneficiaries has significantly increased. In 1940, approximately 222,000 people received an average monthly benefit of $22.60. By mid-2022, the beneficiary count had surged to around 70.61 million. The program’s monthly average benefit for 2022 stood at $1,681, projected to rise to $1,827 in 2023, with annual adjustments for inflation.

As the world’s largest social insurance program, the OASDI system holds a prominent position in the federal budget, with an estimated cost of $1.3 trillion in 2023. The Social Security Administration notes that nearly nine out of 10 individuals aged 65 and older receive benefits, emphasizing its widespread impact.

OASDI payroll tax and funding

Contributions to the OASDI program are made through payroll taxes, known as FICA taxes for employees and SECA taxes for the self-employed. In 2022 and 2023, the Social Security tax rate is 6.2% for employees and 12.4% for the self-employed, with combined federal tax rates for Social Security and Medicare totaling 7.65% and 15.3%, respectively.

These contributions are channeled into two trust funds: the Old-Age and Survivors Insurance (ASI) Trust Fund, catering to retirement benefits, and the Disability Insurance (DI) Trust Fund, serving disability-related benefits. These funds disburse payments to beneficiaries and invest the surplus revenue.

There exists an annual earnings cap subjected to the Social Security tax. In 2022, the cap is set at $147,000, rising to $160,200 in 2023. Earnings beyond this threshold are exempt from further OASDI taxation.

OASDI program criteria and eligibility

The OASDI program extends payments to individuals who meet specific criteria. Retirement benefits can begin as early as age 62, while full retirement age varies based on birthdate, set at 67 for individuals born in 1960 or later. Delayed retirement credits can result in higher benefits for those who wait until age 70 to start collecting.

Survivors’ benefits offer financial support to spouses and eligible children of deceased or retired workers. Disability payments are accessible to individuals unable to engage in substantially gainful activity, meeting defined criteria.

Full eligibility for retirement benefits requires a worker to be fully insured, accomplished through the accumulation of credits (quarters) based on covered wages earned. A maximum of four credits per year can be earned, with 40 credits needed to qualify for Social Security income benefits.

OASDI tax and exemptions

Federal law mandates contributions to the OASDI fund, with workers and employers sharing the responsibility. Income up to $147,000 (2022) and $160,200 (2023) is subject to Social Security taxation. This taxation continues throughout a person’s working life, with Social Security Income claimable starting at age 62.

While exceptions and exemptions to OASDI taxes are minimal, certain religious groups’ clergy and specific nonresident aliens are eligible for exemptions. However, such individuals are also ineligible to receive social security payments.

Examples of OASDI

Let’s explore a couple of scenarios that highlight the practical application of the Old Age, Survivors, and Disability Insurance (OASDI) program:

Retirement benefits: Sarah, a hardworking individual, has spent 40 years in the workforce. She decides to retire at age 65, which is her full retirement age. Thanks to her consistent contributions to the OASDI program throughout her career, Sarah becomes eligible for retirement benefits. Her monthly benefit amount is determined based on her average indexed monthly earnings (AIME) during her working years. Sarah’s retirement benefits provide her with financial stability as she enjoys her golden years.

Disability support: John, a skilled professional, unfortunately faces a disability that prevents him from engaging in gainful employment. As a result, he is no longer able to support himself financially. The OASDI program steps in to provide John with disability benefits. These benefits help cover his essential living expenses and medical needs, offering a safety net during a challenging period in his life.


Here is a list of the benefits and drawbacks to consider.

  • Provides financial support for retired adults and individuals with disabilities.
  • Offers survivors’ benefits to eligible spouses and children.
  • Acts as a safety net for financial challenges due to old age or disability.
  • Subject to taxation on income up to a certain threshold.
  • Benefits may be lower for those who claim early retirement.
  • Exemptions from OASDI taxes are limited.

Frequently asked questions (FAQ) about OASDI

Here are some common questions and answers regarding the Old Age, Survivors, and Disability Insurance (OASDI) program:

How is the amount of OASDI benefits calculated?

The monthly benefit amount is determined using a formula based on your average indexed monthly earnings (AIME) during your working years. The Social Security Administration (SSA) uses a complex calculation that takes into account your highest earning years and applies a bend-point formula to arrive at your primary insurance amount (PIA).

Can I work while receiving OASDI benefits?

Yes, you can work while receiving OASDI benefits. However, if you claim benefits before your full retirement age and earn income above a certain limit, a portion of your benefits may be withheld. Once you reach full retirement age, there are no earning limits, and you can work without any reduction in benefits.

What happens if I claim benefits before full retirement age?

If you claim benefits before your full retirement age, your monthly benefit amount will be permanently reduced. The reduction is calculated based on the number of months before your full retirement age that you start receiving benefits. It’s important to consider the impact of early claiming on your long-term financial well-being.

Can I increase my benefits by delaying retirement?

Yes, delaying retirement beyond your full retirement age can result in higher monthly benefits. For each year you delay claiming benefits between your full retirement age and age 70, your benefits will increase through delayed retirement credits. This can lead to significantly higher benefits over the course of your retirement.

Are OASDI benefits subject to income tax?

Yes, OASDI benefits can be subject to federal income tax depending on your total income. If your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits) exceeds certain thresholds, a portion of your benefits may be taxable. The exact percentage of benefits subject to tax varies based on your income level.

Can I receive both OASDI benefits and other government benefits?

Yes, you can receive OASDI benefits along with other government benefits, such as Supplemental Security Income (SSI) or veterans’ benefits. However, eligibility criteria and benefit amounts may vary for different programs, and receiving one type of benefit may affect the amount you receive from another program.

How can I check my OASDI benefit statement?

You can create a mySocialSecurity account on the SSA website to access your OASDI benefit statement. This statement provides an estimate of your future benefits based on your earnings history and includes valuable information to help you plan for retirement.

Key takeaways

  • The Old Age, Survivors, and Disability Insurance (OASDI) program, commonly known as Social Security, is a comprehensive federal benefits program in the United States.
  • OASDI provides financial support to retired adults, individuals with disabilities, surviving spouses, children, and beneficiaries, aiming to partially replace lost income due to old age, disability, or the death of a spouse.
  • The program was established through the Social Security Act in 1935 during the Great Depression and has since grown significantly to become a vital safety net for millions of Americans.
  • OASDI taxes, collected as FICA and SECA payroll taxes, fund the program, ensuring a stable source of revenue for benefit payouts.
  • Retirement benefits, disability support, and survivors’ benefits are among the key components of the OASDI program, providing essential financial assistance during various life circumstances.
  • Eligibility for benefits is based on factors such as age, covered wages earned, and the accumulation of credits (quarters).
  • OASDI benefits play a critical role in the financial well-being of retirees, individuals with disabilities, and surviving family members, offering a sense of security and stability.
  • Understanding the program’s nuances, including claiming strategies and tax implications, is important for making informed decisions regarding OASDI benefits.
  • While exemptions and exceptions exist, federal law mandates OASDI tax contributions from workers and employers, with limited exceptions.
  • The OASDI program serves as a testament to the commitment of providing social and economic support to individuals, showcasing its enduring significance.
View Article Sources
  1. Social Security Program – ssa.gov
  2. Actuarial status of the OASI (old age survivors insurance) and DI (disability insurance) Trust Funds – National Library of Medicine
  3. Social Security Administration: The 1935 Act – ssa.gov