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

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on August 10, 2023

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What Is the Old Age, Survivors, and Disability Insurance (OASDI) Program?

The Old Age, Survivors, and Disability Insurance (OASDI) program, often called Social Security, is the most extensive income maintenance program in the United States. It provides monthly compensation to partially substitute income lost due to retirement, disability, or death.

The program is administered by the Social Security Administration (SSA). It is funded through taxes collected from workers, employers, and self-employed individuals, known as the OASDI tax.

The money is put into the Federal Old Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund. These funds pay both the benefits and the cost of the whole program.

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History of the OASDI Program

The program was set up when Franklin D. Roosevelt signed the Social Security Act on August 14, 1935. During this time, the economy was afflicted by the Great Depression. In 1937, taxes started to be collected to fund the program.

The program initially benefited the elderly because it intended to replace retirement income. Then, the 1939 amendment included the dependents or the surviving family members of a deceased wage earner. In 1956, another amendment added disability insurance.

Since its inception, the program has also been amended several times to increase benefits and coverage. Today, the program is a cornerstone of income security for the elderly, disabled, and survivors, and millions of Americans are its beneficiaries.


The OASDI tax is collected from employers and employees to fund the program. As of 2023, employees are responsible for 6.2%, or half of the total tax, while employers are responsible for another 6.2%. Combined, this is 12.4% OASDI tax for each person’s payroll.

Self-employed individuals and independent contractors are responsible for the 12.4% OASDI tax. However, when figuring out their adjusted gross income (AGI), they can deduct 50% of the self-employment tax.

The Social Security Administration regulates the annual OASDI rates. The amount of OASDI tax may mostly stay the same, but the maximum wages that are taxed may change depending on inflation and the cost of living index.

In 2022, the OASDI maximum taxable wage was $147,000, while in 2023, it is $160,200. If a person made $235,000 in earnings in 2022, then only $147,000 is liable to OASDI taxes. However, if he earns the same amount in 2023, this time, $160,200 will be taxable.

People can determine how much tax they owe using tools like the Internal Revenue Service’s (IRS) tax withholding calculator. Meanwhile, self-employed individuals can use Schedule SE to estimate their OASDI contributions.

Eligibility for OASDI Program

To qualify for the OASDI program, individuals must meet specific criteria. Generally, applicants must have earned a minimum amount of credits based on the years they have worked and paid OASDI taxes.

The maximum credit allowed annually is four. Each year, the total earnings required to get one credit can vary. In 2022, one credit was awarded for every $1,510 each individual earned annually, while in 2023, a worker gains one credit for every $1,640 earned.

The number of credits needed to apply for retirement benefits, disability benefits, or survivor benefits varies. There are also other requirements, such as age and the number of working years.

For Retirement Benefits

Retirement benefits require at least 40 credits. Individuals typically need around ten years of employment and the proper payment of OASDI taxes to qualify for retirement benefits.

They must also be 62 years old to start collecting retirement benefits. The monthly compensation issued is based on how much each individual earned before retirement.

For Disability Benefits

People are eligible for disability payments if they cannot work owing to a serious, long-term physical or mental ailment that negatively impacts their capacity to work and live independently.

Recent and duration work tests are typically used to determine the individual's eligibility for disability benefits. The number of credits they need to fulfill these tests are contingent on their age and period of employment.

Recent Work Test

Individuals below 24 years old may qualify for disability benefits if they have earned at least six credits in the three years immediately preceding the onset of their disability.

Meanwhile, people aged 24 to 31 can qualify if they earned credits equal to half the period they worked between turning 21 and the beginning of their disability. Thus, the number of credits they need can range from 6 to 20.

Individuals older than 31 years old need to have earned 20 or more credits in the ten years before the onset of their disability.


Duration Work Test

The length of employment does not need to fall within a specific time frame for individuals to pass the duration work test. Instead, the table below only estimates the number of work credits required to pass this test.


For Survivor Benefits

Survivor benefits are available to the spouses or children of a deceased individual. The number of credits required for these benefits will depend on the age of the demise. Fewer credits are needed for younger persons, and 40 credits are the maximum necessary for any individual.

Even if an individual lacks the required credits, the SSA may be able to pay benefits to their beneficiaries. The family members of deceased individuals who have earned at least six credits for one-and-a-half years of work in the three years before their death can be entitled to benefits.


Who Is Excluded From OASDI Program?

The OASDI program was designed to provide support and security to those who have worked hard, paid their taxes, and made necessary contributions to society. However, some specific individuals are not eligible for these benefits.

Civilian Federal Employees

Civilian federal employees hired before January 1, 1984, are not covered under the OASDI program. Instead, they contribute to the Civil Service Retirement System (CSRS).

Railroad Workers

Railroad workers are not eligible for OASDI benefits because the Railroad Retirement program covers them. This program works in coordination with Social Security and is funded from payroll taxes paid by railroad employers and employees.

Employees of State and Local Governments

These employees might not be covered under the OASDI program if they were hired before 1986. Instead, they may be entitled to pensions from their employers or contribute to other retirement systems, such as the Civil Service Retirement System.

Domestic Workers and Farm Workers

Farm and domestic workers who are earning wages below certain levels are also excluded from OASDI benefits. This is because an anticipated administrative problem is associated with pay reporting and tax collection.

Persons With Very Low Net Earnings

Individuals with minimal net earnings from self-employment, often less than $400 per year, may also not be eligible for OASDI benefits.

The Bottom Line

The OASDI program, more commonly known as Social Security, is the most comprehensive income maintenance program in the United States. It provides benefits to retired and disabled workers, as well as their dependents and survivors.

The program was set up when Franklin D. Roosevelt signed the Social Security Act on August 14, 1935. It initially benefited the elderly by replacing retirement income and was amended several times since then to increase benefits and coverage.

The Social Security Administration collects OASDI taxes from employees, employers, and self-employed individuals. As of 2023, the tax rates for both employee and employer are at 6.2% each, for a total of 12.4%. Self-employed individuals must pay the full 12.4% themselves.

Retirement benefits require individuals to meet several credit requirements. Meanwhile, disability benefits have recent work tests, duration work tests, and age requirements. Lastly, survivor benefits are based on age and the number of work credits acquired.

Some individuals are not eligible to receive OASDI benefits, such as civilian federal employees, railroad workers, some state or local government employees, domestic or farm workers, and self-employed people whose earnings are below $400.

Understanding the OASDI program is one of the first steps in preparing for retirement. For more in-depth support on retirement planning, you can consult a financial professional.

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

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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