OASDI stands for Old-Age, Survivors, and Disability Insurance. It is the formal name of the federal Social Security program in the United States that provides monthly benefits to qualified retired and disabled workers, their dependents, and survivors of insured workers
. Key points about OASDI:
- It is funded by mandatory payroll taxes collected under the Federal Insurance Contributions Act (FICA)
- Both employees and employers contribute to the tax, each paying 6.2% of the employee’s wages, for a total of 12.4%. Self-employed individuals pay the full 12.4% themselves but can deduct half of it on their tax returns
- The tax funds three main types of benefits:
- Old-Age benefits: Monthly retirement payments to eligible retirees based on their lifetime earnings and work credits
* **Survivors benefits:** Payments to surviving spouses and children of deceased insured workers, based on the deceased’s contributions
* **Disability benefits:** Payments to workers who become disabled and cannot work, calculated based on earnings and work history
- There is an annual wage base limit on earnings subject to OASDI tax, which for 2025 is $176,100
In summary, OASDI is the official Social Security program that provides financial protection against retirement, disability, and death, funded through payroll taxes on workers and employers
