OASDI stands for Old-Age, Survivors and Disability Insurance and is the formal name for what is commonly known as Social Security. The OASDI amount withheld from your paycheck helps fund the Social Security program's payments to current retirees and others who receive benefits. Similar OASDI withholding will help fund any Social Security benefits you receive after you finish working due to retirement or disability.
The Old-Age, Survivors, and Disability Insurance (OASDI) Program
OASDI provides monthly benefits to workers when they retire or become disabled and can no longer work, and also provides several forms of support to a worker's dependents and survivors after the worker's death. In order to qualify for OASDI benefits, also known as Social Security, a worker has to have paid into the system during their working years.
Scope of OASDI
In 2008, more than 50 million Americans received total OASDI benefits of $615 billion, accounting for almost five per cent of the nation's Gross Domestic Product.
At the same time, 162 million employees, along with their employers, contributed $672 billion to Social Security in 2008.
OASDI and Your Paycheck
Your contribution to OASDI regularly appears as a withholding amount on your paycheck. The amount withheld is your contribution to OASDI; your employer also contributes to the system. For 2011, the OASDI tax rate is 4.2 per cent of an employee's salary for the first $106,800 of his earnings. There is no OASDI withholding for earnings beyond that amount.
OASDI for the Self-Employed
Self-employed workers pay both the employee's and employer's contribution to OASDI, a total of 10.4 per cent on the first $106,800 in earnings for 2011.