OASDI is the Social Security program that takes money from your paycheck

OASDI stands for Old-Age, Survivors, and Disability Insurance. It is the formal name for Social Security — the federal program that collects a portion of your wages during your working years and pays benefits to you or your family later. When you see "OASDI" on your pay stub, it means Social Security tax was withheld from that paycheck.

OASDI is one part of FICA, the total Social Security and Medicare tax you pay. The OASDI portion funds retirement benefits, survivor benefits (paid to your family if you die), and disability benefits. The other part of FICA is Medicare tax, which funds hospital and medical insurance for people 65 and older.

The OASDI tax rate is 6.2% of your wages if you are an employee, and your employer pays another 6.2%. If you are self-employed, you pay both portions — 12.4% total. The money comes out of your gross pay before taxes, which means it reduces your taxable income.

Key Takeaways

  • OASDI is Social Security, and the OASDI line on your pay stub shows the Social Security tax withheld from your paycheck.
  • The OASDI tax rate is 6.2% for employees (your employer pays another 6.2%) and 12.4% for self-employed workers.
  • OASDI funds three types of benefits: retirement at age 62 or later, survivor benefits if you die, and disability benefits if you become unable to work.
  • You earn credits toward OASDI benefits by working and paying into the system; most people need 40 credits to receive retirement benefits.
  • The amount you receive in OASDI benefits depends on how much you earned during your working years and when you claim.

How OASDI benefits are calculated

Your OASDI benefit amount is based on your earnings history — specifically, the 35 years in which you earned the most. Social Security calculates an average of those earnings and applies a formula to arrive at your Primary Insurance Amount (PIA), which is the benefit you receive at your full retirement age.

Full retirement age depends on the year you were born. For people born in 1960 or later, full retirement age is 67. If you claim OASDI retirement benefits before full retirement age, your monthly payment is reduced. If you delay claiming past full retirement age, your benefit increases by roughly 8% per year until age 70.

The Social Security Administration publishes your earnings record in your online account (my Social Security). You can review it to make sure it is accurate, because errors in your record will lower your eventual benefit. If you spot a mistake, you can contact Social Security to correct it.

Who receives OASDI survivor and disability benefits

OASDI is not only for retirement. If you die, your family may receive survivor benefits based on your earnings record. may be able to access survivors include your spouse (at any age if caring for your child under 16, or at 60 or older), your children under 19 (or 19 if still in high school), and your parents if you were supporting them.

Disability benefits under OASDI go to workers under 65 who have a severe medical condition expected to last at least 12 months or result in death. You must have worked long enough and recently enough to have earned sufficient credits. The amount you receive is based on your earnings record, the same way retirement benefits are calculated.

Family members of a disabled worker can also receive benefits on that worker's record — a spouse caring for a child under 16, children under 19 (or 19 if in high school), and in some cases a spouse 62 or older.

The difference between OASDI and Medicare tax

OASDI and Medicare are both part of FICA, but they fund different programs. OASDI (Social Security) funds retirement, survivor, and disability benefits. Medicare tax funds hospital insurance (Part A) and medical insurance (Part B) for people 65 and older, and for some younger people with disabilities or end-stage renal disease.

The Medicare tax rate is 2.9% total (1.45% from you, 1.45% from your employer if you are an employee). Unlike OASDI, there is no wage cap on Medicare tax — you pay it on all your earnings. Additionally, high-income earners pay an extra 0.9% Medicare tax on wages above a certain threshold.

On your pay stub, you will see OASDI and Medicare listed separately so you can see exactly how much of your FICA tax goes to each program.

OASDI wage base and tax cap

Not all of your earnings are subject to OASDI tax. The Social Security Administration sets an annual wage base — a maximum amount of earnings subject to the OASDI tax. Once you earn more than that amount in a year, no additional OASDI tax is withheld from your paycheck for the rest of that year.

The wage base changes each year based on national wage trends. This means high earners stop paying OASDI tax partway through the year, while lower and middle-income earners pay it on all their wages. Self-employed workers pay OASDI tax on net self-employment income up to the same wage base.

Medicare tax, by contrast, has no wage base cap — you pay it on all earnings regardless of how much you make.

How to check your OASDI record and earnings

You can create a free account at ssa.gov to view your Social Security earnings record and get an estimate of your future OASDI benefits. The account is called my Social Security, and it shows your complete earnings history, the number of credits you have earned, and a projection of your retirement benefit at different claiming ages.

Reviewing your record regularly is important because errors can reduce your benefits. If you spot a discrepancy — such as earnings that were not credited to your account — you can contact Social Security with documentation (like a W-2 or tax return) to request a correction. Social Security has a limited time window to correct errors, so it is best to catch them early.

If you do not have an online account, you can request a paper statement by mail from Social Security, though the online account is faster and more convenient.

What happens to OASDI if you work after claiming benefits

If you claim OASDI retirement benefits before full retirement age and continue working, your benefits may be reduced if your earnings exceed a certain limit. For 2024, if you are under full retirement age for the entire year, Social Security reduces your benefit by $1 for every $2 you earn above the limit. In the year you reach full retirement age, the reduction is $1 for every $3 earned above a higher limit, but only for earnings before the month you reach full retirement age.

Once you reach full retirement age, there is no limit on how much you can earn without affecting your OASDI benefit. This is one reason some people delay claiming until full retirement age or beyond — it allows them to keep working without a reduction in benefits.

Self-employed income counts toward these limits, so if you own a business and claim early, you need to track your net self-employment income carefully.

Frequently Asked Questions

Why is OASDI called Social Security?

OASDI is the official government name for the Social Security program. Social Security is the common name most people use. The program was created in 1935 to provide economic security for retired workers, and it has expanded to include survivor and disability benefits. You will see both names used interchangeably on government documents and pay stubs.

Can I receive OASDI benefits if I did not work in the United States?

You must have earned at least 40 credits under the U.S. Social Security system to receive retirement benefits. Credits are earned by working and paying OASDI tax. If you worked in another country, those years may not count toward your U.S. Social Security record unless there is a totalization agreement between the U.S. and that country. Contact Social Security to discuss your specific situation.

What if I never paid into OASDI?

If you never worked or paid OASDI tax, you will not receive retirement benefits based on your own earnings record. However, you may be able to receive benefits as a spouse, ex-spouse, or dependent of someone who did work and pay into OASDI. The rules for these family benefits are complex and depend on your age and relationship to the worker.

Does OASDI tax apply to all types of income?

OASDI tax applies to wages from employment and net self-employment income. It does not apply to investment income, rental income, or other unearned income. Some government employees hired before a certain date are not covered by OASDI, though most government workers pay into the system today.

Can I get my OASDI contributions back if I move out of the country?

No. OASDI tax is not refundable — once you pay it, you cannot get it back. However, you may still be able to receive OASDI benefits if you move abroad, depending on your citizenship and the country where you live. Some countries have agreements with the U.S. that allow their citizens to receive Social Security benefits while living there. Contact Social Security before moving internationally.