DEFINITION of Old-Age, Survivors and Disability Insurance Program - OASDI
The old age, survivors, and disability insurance program (OASDI) is the official name for Social Security in the United States. The OASDI is a comprehensive federal benefits program that provides benefits to retirees, disabled people and their survivors. The goal of the program is to partially replace income that is lost due to old age, death of a spouse or qualifying ex-spouse, or disability. Payments to qualifying persons are funded through payroll taxes collected by the government called FICA taxes. The program was ushered in through the Social Security Act, signed by President Franklin D. Roosevelt on August 14, 1935, when the U.S. economy was in the depths of the Great Depression.
The OASDI program provides payments to people who meet certain criteria. For old age payments, money is paid to qualifying persons between the ages of 62 and 70. Payments are calculated based upon their wages earned while they were of working age. Survivors payments are made to surviving spouses or eligible children of deceased workers. Disability payments are made to eligible persons who are no longer able to participate in substantially gainful activity and who meet additional criteria.
To qualify for old age benefits, a worker must be fully insured. A worker can become fully insured by accumulating credits (also called quarters) of coverage. Credits/quarters are accumulated based on covered wages earned for a particular period. In 2018, one quarter of coverage is awarded to a worker for every $1,320 earned. The dollar amount is indexed every few years for inflation. A worker can earn up to four credits/quarters of coverage per year.
BREAKING DOWN Old-Age, Survivors and Disability Insurance Program - OASDI
The U.S. Social Security program is the largest such system in the world and is also the biggest expenditure in the federal budget. One in seven Americans receives a Social Security benefit and more than 90% of all American workers are in jobs covered by Social Security. The program has grown in leaps and bounds over the decades: In 1940, just over 222,000 people received a total of $35 million in Social Security benefits. By 2015, that number had increased to more than 59 million Social Security recipients who collectively received almost $870 billion in benefits.