What is one of the key components of Old Age, Survivors, and Disability Insurance (OASDI)?

The key component of Old Age, Survivors, and Disability Insurance (OASDI) is that it is based on the individual’s earning history. This means that the benefits received by individuals, whether for retirement, disability, or survivors, are directly linked to their past work earnings and the amount they contributed to the Social Security system during their working years. The benefit calculation takes into account the highest-earning years of an individual, which determines the monthly benefit amount once the individual becomes eligible for benefits.

Understanding this feature is crucial because it highlights the importance of work history and contributions to the social insurance program, ensuring that benefits are distributed in a manner that reflects individuals' financial contributions to the system. This earning-based approach is foundational to the program's design and operational principles.