Old-Age and Survivors Insurance (OASI) Trust Fund Overview

By
Julia Kagan
Julia Kagan
Full Bio

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

Learn about our editorial policies
Updated May 20, 2024
Reviewed by
David Kindness
David Kindness
Reviewed by David Kindness
Full Bio
David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. David has helped thousands of clients improve their accounting and financial systems, create budgets, and minimize their taxes.
Learn about our Financial Review Board
Fact checked by
Vikki Velasquez
Vikkie Velasquez
Fact checked by Vikki Velasquez
Full Bio
Vikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area.
Learn about our editorial policies

What Is the Old-Age and Survivors Insurance (OASI) Trust Fund?

The Old-Age and Survivors Insurance Trust Fund (OASI) is a U.S. Treasury account holding the tax receipts that fund Social Security benefits paid to retired workers, their surviving spouses, and their eligible children. The fund is managed by the Social Security Administration (SSA), which has the authority to distribute OASI Trust Fund benefits to eligible recipients.

Key Takeaways

  • The Old-Age and Survivors Insurance Trust Fund is a Treasury account used to pay Social Security benefits.
  • The fund holds receipts from payroll taxes earmarked for Social Security benefits other than disability insurance under the Federal Insurance Contributions Act and the Self-Employment Contributions Act.
  • The fund has the standing authority to pay monthly benefits to retired workers and their survivors without separate congressional appropriations.
  • The OASI fund is expected to exhaust its surplus in 2033, at which point its receipts are only expected to amount to 79% of projected payment obligations.

How the Old-Age and Survivors Insurance (OASI) Trust Fund Works

The Old-Age and Survivors Insurance Trust Fund was established on Jan. 1, 1940, under the Social Security Act amendments of 1939. Payroll or employment taxes received under the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act (SECA) are deposited daily into the OASI Trust Fund held in a separate account at the U.S. Treasury.

The fund also has the authority to pay monthly Social Security benefits. The OASI Trust Fund has been an important part of the U.S. social safety net alongside Medicare and Medicaid.

The benefits under OASI are part of a larger program called the Old-Age, Survivors, and Disability Insurance (OASDI) program. In addition to OASI, OASDI includes the Disability Insurance (DI) Trust Fund designed to help people with permanent disabilities.

The DI Trust Fund was established by amendments to the Social Security Act in 1956 and became effective in 1957. The DI Trust Fund fills a role similar to that of OASI, receiving the share of payroll taxes earmarked for disability payouts and investing the surplus in the same securities as OASI until the funds are needed. The programs have the same board of trustees.

Old-Age and Survivors Insurance (OASI) Trust Fund Investments

The SSA invests any OASI Trust Fund inflows that aren't needed to meet current expenses. The OASI Trust Fund redeems or sells securities to make benefit payments or for other expenses. The money is invested in two types of interest-bearing federal securities:

  • Special issues, which are government-backed securities that are only available to the trust fund
  • U.S. Treasury bonds, which are government debt securities that are publicly traded

The interest earned from these investments is deposited into the OASI Trust Fund and may also be used for benefit payments.

The SSA adjusts Social Security benefits annually based on the cost of living, which increases payouts to offset inflation. The cost of living adjustments (COLAs) are based on changes in an inflation metric called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks the consumer prices paid by hourly and clerical workers. The SSA announced a 3.2% cost-of-living adjustment to Social Security benefits for 2024.

Old-Age and Survivors Insurance (OASI) Trust Fund Board of Trustees

The fund's Board of Trustees consists of six members, two of whom are appointed by the President and confirmed by the Senate. The remaining four board member positions are held ex officio by the following Cabinet-level officials:

  • Secretary of the Treasury, who serves as managing trustee
  • Secretary of Labor
  • Secretary of Health and Human Services
  • Commissioner of Social Security

The OASI and DI Trust funds are known collectively as Social Security. They provide retirement, survivorship, and disability benefits to almost 68 million Americans per month, paying out more than $1.5 trillion each year.

Limitations of the Old-Age and Survivors Insurance (OASI) Trust Fund

The OASI and DI trust funds held a combined $2.64 billion at the end of 2023. They're expected to exhaust those reserves by 2035, according to the 2024 annual report by the funds' trustees.

  • OASI Retirement and Survivorship Benefits: On its own, OASI is projected to run out of surplus funds in 2033, a year earlier than OASDI and a year earlier than projected in the trustees' prior year's annual report. OASI's income from payroll tax receipts is expected to amount to 79% of the projected benefit payouts at the point its surplus runs out.
  • Disability Benefits: The 2024 report projected a DI surplus persisting until 2098, a year later than 2023's projection.

Old-Age and Survivors Insurance (OASI) Trust Fund Financial Challenges

Social Security's solvency has been strained by gains in life expectancy and by the ongoing retirement of baby boomers, which is a significantly larger age group than the one replacing it in the workforce.

A 65-year-old retiree had a life expectancy of not quite 14 years in 1940, versus just over 20 years in 2022. The number of Americans who are age 65 and older is expected to increase from 58 million in 2022 to 76 million by 2035.

The ratio of workers paying into Social Security per benefits recipient is projected to decline from 2.7 in 2023 to 2.3 in 2035 as a result. The U.S. Congress will have to make changes to replenish the fund if future retirees are to receive full benefits.

Is OASI the Same As Social Security?

Yes, OASI is the same as Social Security. Social Security consists of two parts. The first part is Old-Age and Survivors Insurance, which pays benefits to retirees, their families, and survivors. The second part is Disability Insurance, which pays benefits to disabled workers.

Which Trust Fund Pays for Retirement and Survivor Benefits?

The trust fund that pays for retirement and survivor benefits is the Old-Age and Survivors Insurance Trust Fund. The fund that pays benefits to disabled workers is the Disability Insurance Trust Fund.

How Is the OASI Account Funded?

The OASI account is funded through payroll taxes. All employees are taxed 6.2% of their incomes for Social Security up to a cap of $168,600 in 2024. The taxes fund the OASI Trust Fund, which pays retirement benefits.

The Bottom Line

The Old-Age Survivors Insurance Trust Fund is one part of the Social Security program. Individuals pay into the program when they work, allowing them to receive benefits when they retire. Payroll taxes fund the Old Age and Survivors Insurance Trust Fund. The ongoing wave of baby boomer retirements is expected to reduce the amount of taxes collected and earmarked for OASI.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. Social Security Administration. "Old-Age & Survivors Insurance Trust Fund."

  2. Social Security Administration. "What Are the Trust Funds?"

  3. Social Security Administration. "Disability Insurance Trust Fund."

  4. Social Security Administration. "Special Issue Securities."

  5. Social Security Administration. "Social Security Cost-of-Living Adjustments and the Consumer Price Index."

  6. Social Security Administration. "Cost-Of-Living Adjustments."

  7. Social Security Administration. "Cost-of-Living Adjustment (COLA) Information."

  8. Social Security Administration. "Fact Sheet: Social Security." Page 1.

  9. Social Security Administration. "The 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds." Pages 31, 33, 37.

  10. Social Security Administration. "Status of the Social Security and Medicare Programs: A Summary of the 2024 Annual Reports."

  11. Social Security Administration. "The 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds." Page 4.

  12. Social Security Administration. "Fact Sheet: Social Security." Page 2.

  13. Social Security Administration. "Contribution and Benefit Base."

Open a New Bank Account
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.