Old-Age, Survivors, and Disability Insurance (OASDI) Program

What is OASDI?

The Old-Age, Survivors, and Disability Insurance (OASDI) program is the official name for the U.S. Social Security system. Funded by payroll taxes, it provides income support to retirees, eligible people with disabilities, and their spouses, dependents, and survivors. Its purpose is to partially replace lost income due to retirement, disability, or the death of a worker.

Key takeaways

• OASDI is the federal Social Security program that pays retirement, disability, and survivor benefits.
• Funding comes from payroll taxes (FICA for employees and SECA for the self-employed).
• Benefit amounts are based on a worker’s earnings history (average indexed monthly earnings over the 35 highest-earning years).
• Full retirement age and the number of work credits affect eligibility and benefit amounts.
• Benefits are adjusted periodically for inflation (COLA).

How the program works

History and scale
* Established by the Social Security Act of 1935, OASDI has grown into the largest social insurance program in the U.S.
* It accounted for roughly $1.4 trillion in federal spending in 2024.
* Most Americans age 65 and older receive Social Security benefits.

Benefit calculation
* Retirement benefits are calculated from a person’s average indexed monthly earnings (AIME) based on their 35 highest-earning years.
* Workers can begin reduced retirement benefits as early as age 62. Full retirement age depends on birth year (67 for those born in 1960 or later). Delaying benefits up to age 70 increases the monthly benefit through delayed retirement credits.
* Disability and survivor benefits have their own eligibility rules but are also generally based on the worker’s earnings record.

Cost-of-living adjustments
* Benefits are periodically adjusted for inflation. A 2.5% COLA was applied in 2025 (3.2% in 2024).

Funding: OASDI payroll taxes

Tax mechanics
* Social Security taxes are collected through payroll taxes:
* Employees pay 6.2% of covered wages for Social Security; employers match 6.2%.
* Self-employed individuals pay the combined rate of 12.4% (SECA).
* Combined Social Security and Medicare rates are 7.65% for employees and 15.3% for the self-employed.

Earnings cap and trust funds
* Only wages up to the annual taxable maximum are subject to Social Security tax. The taxable maximum was $168,600 in 2024 and rose to $176,100 in 2025.
* Revenues are held and administered in two trust funds:
* Old-Age and Survivors Insurance (OASI) Trust Fund for retirement and survivors benefits
* Disability Insurance (DI) Trust Fund for disability benefits

Eligibility and credits

Work credits
* Workers earn credits (quarters) for covered earnings. In 2025, one credit equals $1,810 in earnings; a worker can earn up to four credits per year.
* Typically, 40 credits (about 10 years of work) are required to qualify for retirement benefits.

Ages and eligibility
* Early retirement: as early as age 62 (reduced benefits).
* Full retirement age: depends on birth year (67 for people born in 1960 or later).
* Delayed retirement: benefits increase for deferring up to age 70.
* Disability benefits: awarded to workers who meet medical and work history criteria and are unable to engage in substantial gainful activity.
* Survivor benefits: paid to eligible surviving spouses and dependents of deceased workers.

Taxes on Social Security benefits and exemptions

• A portion of Social Security benefits may be taxable depending on combined income. Generally, individuals with combined incomes below $25,000 (and couples below $32,000) may pay no federal tax on benefits; otherwise up to 85% of benefits can be taxable.
• Very limited exemptions to OASDI taxes exist (for certain religious group members or some nonresident aliens), but those who claim these exemptions are generally ineligible for Social Security benefits.

Bottom line

OASDI (Social Security) is a federal, payroll-tax-funded program that provides retirement, disability, and survivor benefits. Workers and employers contribute each year up to a capped wage base; benefits are calculated from lifetime earnings and adjusted for inflation. Eligibility depends on accumulated work credits, age, disability status, or survivor relationship.