The Survivors and Disability Insurance Program (OASDI), also known as Social Security, is a federal program that provides income and health insurance to retired, disabled, poor, and other groups. The program began in 1935 with the signing of the Social Security Act, which was an effort to provide a safety net for the millions of people who had suffered from the Great Depression.
How it works (Example):
The primary programs offered through OASDI:
Retirement benefits. The age at which a person qualifies for benefits depends on the year of birth, but generally a person can receive full benefits around age 66. In many cases, beneficiaries can choose to begin receiving benefits at age 62, but at a reduced price. The Social Security Administration generally increases the amount of benefits by 8% for each year that a beneficiary delays receiving benefits (up to age 70). In general, people must work for at least 10 years in order to receive these benefits. Payments are based on earnings (so higher earnings mean higher benefits) and the age at which the beneficiary retires. In 2011, an average monthly benefit of $ 1,229 was paid to approximately 38.9 million people. As a result,
Disability benefits. People disabled for at least five full months and can continue as long as the person has health coverage. the condition has not improved and the person is unable to work. Approximately 10.6 million people received an average monthly benefit under this program of $ 1,111 in 2011. People who receive disability benefits for 24 months are typically eligible for Medicare. Because applications increased dramatically during the Great Recession, the Congressional Budget Office estimates that this fund will become insolvent in 2017.
Survivor BenefitsThis program provides monthly payments to children and widows or widowers of Social Security beneficiaries. In 2011, 6.3 million people received an average of $ 1,185 per month under this program. Typically, survivors receive between 75% and 100% of the beneficiary’s basic Social Security benefit. The limit that can be paid to a general family generally equates to between 150% and 180% of the deceased’s benefits.
Supplemental Security Income (SSI). This program provides monthly payments to people age 65 or older who are blind or disabled and have few financial resources (generally no more than $ 2,000, but this excludes personal residence, life insurance, auto, funeral parcels, and $ 1,500 in funding funeral).
Because it is important:
OASDI and Medicare expenditures made up approximately 50% of federal government outlays in 2011. The programs receive a substantial portion of their revenue through the collection of employer and employee payroll taxes. The business model has come under considerable scrutiny in recent decades as the baby boomer generation is entering retirement and requesting benefits that cannot be sustained by payroll taxes from the younger generations that remain in the workforce.