Old-Age, Survivors, and Disability Insurance (OASDI) Program Definition
Define OASDI In Simple Terms
The federal old-age, survivors, and disability insurance program, or OASDI, is a social security program that provides benefits to retirees and people with disabilities, as well as to their spouses, children, and survivors.
The purpose of this system is to partially compensate for income that is lost due to old age, the death of a spouse or qualifying ex-spouse, or disability.
What Does OASDI Mean In Finance?
Payments are funded by OASDI taxes, which are part of a larger set of taxes known as FICA, or Federal Insurance Contribution Act, taxes.
This revenue is held in two trust funds: the old-age and survivors insurance (ASI) trust fund for retirement, and the disability insurance (DI) fund for disability.
These funds pay out their benefits and invest the remainder of what they collect.
This program is the largest of this type of system in the world, and is also the United States’s largest single expenditure, projected to cost $1.17 trillion in 2020.
The program was initiated by the signing of the Social Security Act of 1935 by then president Franklin Delano Roosevelt.
The program has grown over the years to match changes in the US population and economy.
In 1940, about 220,000 people received an average monthly benefit of $22.60. In 2020, there are over 63 million social security recipients, who earn an average benefit of $1,503.