Definition: OASDI (Old Age, Survivor, and Disability Insurance), otherwise known as Social Security in the United States, is a government program focused on providing financial support to individuals who are retired, disabled, or are the surviving beneficiary of a deceased individual.
What Does OASDI Mean?
What is the definition of OASDI? Within the United States, OASDI is more commonly known as Social Security. Managed by the US Social Security Administration (SSA), OASDI acts as a supplemental source of income for individuals who become eligible for social security benefits. Individuals can start collecting these benefits at age 62 (at the earliest), upon becoming disabled, or if they are the beneficiary of a deceased individual. Based on data issued by the SSA, during 2016 approximately 61 million Americans received around $918B in benefits.
Where does funding for OASDI come from? The short answer is you, me, and our employers. The SSA requires employers to withhold funds from employee’s gross income. Additionally, employers are responsible for matching the amount withheld from the employee’s gross income, and remitting the entire amount to the SSA. The SSA uses the withholdings to pay current beneficiaries. During 2016, the SSA reported that there were approximately 2.8 active workers per every current beneficiary.
Although this is what the system has turned into, it wasn’t originally supposed to work like this. It was meant as a retirement for people who contribute to it. Thus, you were supposed to receive your contributions at retirement.
Let’s look at an example.
There are a variety of rules and stipulations surrounding the benefit amount an individual will receive upon meeting eligibility requirements for Social Security. The primary factors are the number of working years and the average income earned over your working life. Since these factors drive how much you pay into Social Security, they also fuel how much you get out. The SSA maintains a variety of tools to help Americans estimate the Social Security benefits they will receive upon reaching a method of eligibility.
For instance, assuming an individual works the minimum number of years to receive Social Security (10 years), a 30 year old person (in 2016) making an average of $100,000 per year over the course of their life, retiring at age 67 would receive approximately $3,300 per month in today’s US dollars.
Define OASDI: OASDI means a government sponsored financial support benefiting retired, disabled, and surviving Americans.