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Largest single category of Federal outlays.
For most Americans, Social Security tax is largest tax that they pay
Employer's payroll tax falls on workers
Social Security is not a Pension Plan
Types of Pension Plans
Lump Sum vs. Insured Annuity (explain insured annuity)
Defined Contribution vs. Defined Benefit
Risks of defined benefit plans: investment risk, actuarial risk; role of reserves
Social Security: insured annuity, defined benefit plan, without reserves. Transfer program from worker to retirees
Key ratio: number of workers per retiree
For Japan and Western Europe, crisis begins sooner and goes deeper.