2. Factors EconomicHealth and Family  Unemployment  Inflation  Knowledge of Finance/Wealth Management  Illness/disability  Family

3. Unemployment  Cannot retire without first working  Firm’s ongoing attempt to cut costs  Increased use (and abuse) of public assistance  WIC: Women, Infants, and Children  HUD: Housing and Urban Development  CHIP: Children’s Health Insurance Program  Increase in government spending  Labor Force  Productivity  Capital Accumulation  Rent-seeking

4. Firms Cut Costs  Saving on payroll- benefit in the short run, but may hurt in the long run  First in, first out- may be a better idea to cut some of the middle management instead?  Younger generation is the future of the firm  Mergers/Acquisitions-  You may quickly be replaced if your firm is bought by another

5. Government Spending- Its effects  Labor Force  Reduces participation by creating disincentives to work  Makes labor markets more rigid by hampering efficient flow of workers from declining industries to expanding industries  Productivity  Inhibits innovation and capital accumulation  Resources are withdrawn from the private sector and placed in the unproductive public sector

6. Government Spending- Its effects  Capital Accumulation  Increases interest rates which decrease private investment  Creates uncertainty that reduces the return of long-term investments  Rent-Seeking  Creates opportunities for rent-seekers to waste resources to curry political favor  Distorts economic markets, reduces economic growth, and destroys the free market ethic

7. Public Assistance Example- WIC  Pregnant and breastfeeding women; women who recently had a baby; infants birth through 12 months; children 1 to 5 years; who are:  Present at the clinic appointment, and provide proof of identity;  Residents of the State of Ohio;  Determined by health professionals to be at medical/nutritional risk; and  Meets income guidelines - 185% of Federal Poverty Income Guidelines.

8. Unemployment vs. Inflation  Phillips Curve:  Inverse relationship between unemployment and inflation  Tradeoff- we cannot have both low unemployment AND low inflation, we must choose one or the other  Why have we had both in recent years?

9. Individuals’ Finances- saving and spending  Cost of living vs. Standard of living  Because the cost of living will likely increase, we must save in order to maintain our standard of living  What’s good for us now, won’t necessarily be good for us later  Save for retirement later, but ‘later’ comes too soon  70% of families live paycheck to paycheck  Those entering the workforce now will likely make less and save more; probably for the rest of their lives

10. Individuals’ Finances- Planning for retirement  Investing: diversification of risk  Options:  IRAs  Pensions  Annuities  401(k)  Social Security? “Save 10% of your salary each year and you'll be fine!” -- Walter Updegrave, CNN Money

11. Investing in stock: Apple  Buy low, sell high  Low: January 20, 2009 at $78.20  Many shareholders decided to sell and invest in a safer option  lost opportunity  Current: $338.04 (Apr 6, 6:25PM EDT )  There was money to be made, provided we chose our investments more wisely

12. Investing in stock: Apple

13. Health and Family  Illness/disability  Benefits may decrease, premiums may increase  Leading cause for foreclosures  Normal time for being out of work  Average of 2.5 years  1 out of 7 will be on disability for 5 years or more

14. Health and Family  Life insurance  Leaving the family to pay the expenses  May acquire the expenses of another family member  Children  It now costs an average middle-income American family $222,360 to raise a child from birth to 18.  22% higher than it was in 1960, adjusted for inflation

15. How much to save?  The 25 year old starter invests $55,000 and ends up with $615,580 at retirement.  The 35 year old starter invests $130,000 and still has less at retirement: $431,754

16. How much to save?

17. Preparation  Many factors are beyond your control- plan for the worst case scenario  Begin saving early- compounding will give more benefit  Diversify your risk- never place all funds into a single asset or type of asset