Ready for a better year? In 2009, most Americans hung on to their pocketbooks for dear life and prayed desperately for an economic miracle. Here's a list of 10 reasons why we actually can be hopeful and lets you decide if this year will warrant more optimism.
1. Most salary budgets will be unfrozen.
According to a recent survey by Towers Perrin, 65 percent of participants who froze salary budgets in 2009 will unfreeze them in 2010, and just 17 percent say they have plans for a salary freeze in 2010.
2. The job market is expected to improve.
Unemployment remained unchanged in March but the economy added 162,000 jobs. Combined with the late 2009 surge in hiring temp workers, the signals for a job market recovery are growing stronger.
"As employers start to feel confident about future business conditions, they will increase the hours of part-timers and make temporary workers permanent," says John A. Challenger, chief executive officer of executive outplacement consulting firm Challenger, Gray & Christmas.
3. Saving and frugality are becoming commonplace.
After the markets wiped out many investors' portfolios, American consumers have a renewed interest in savings. Household debt fell 1.7 percent in 2009, the first annual drop since records began in 1945, according to the Federal Reserve. Personal income rose 0.3 percent in January and 0.1 percent in February. The dark days of 2009 have certainly encouraged consumers to spend more wisely, and tighter credit restrictions in 2010 should foster a new savings culture.
4. Consumer confidence is improving.
The Conference Board Consumer Confidence Index, rebounded in March to 52.5. The Expectations Index in particular increased by more than seven points, with an optimistic outlook for business and labor market conditions as the driving force.
5. Employee productivity is on the rise.
The U.S. Bureau of Labor Statistics reported a 6.9 percent annual rate increase in nonfarm business sector labor productivity during the fourth quarter of 2009. This followed an 8.1 percent gain in the third quarter, which was considered the largest gain in productivity since the third quarter of 2003.
6. "Green" trends translate into potential jobs, less waste and more cost savings.
Going green is good business, and companies nationwide are learning new ways to be better stewards of the environment. Creating and using new technology, streamlining business processes and managing with less paper could mean new jobs and lower costs.
7. "Doing more with less" often inspires innovation.
Companies, families and individuals have all learned to stretch a dollar in these tough economic times. Working lean and pinching pennies have strengthened problem-solving skills and expanded creative thinking in industries nationwide.
8. Social media use will continue to rise, providing an opportunity for cost-effective marketing.
The number of individuals and businesses who use social media has exploded in the last year. According to BtoB magazine's "2010 Outlook: Marketing priorities and plans" survey, more than half (53.5 percent) of marketers surveyed said they currently use social media as part of their marketing strategy. This is up from last year, when 45 percent of marketers said they used social media for marketing. As cost-effective communications tools, social media give you new ways to introduce and promote your 2010 benefits package.
9. Consumers want more protection, security and flexibility.
After the collapse of companies that were deemed "too big to fail," consumers' priorities have shifted to doing business with stable, reliable partners. For employers who offer comprehensive benefits, this is an opportunity to put employees' concerns at ease. Those concerns are also felt in the C-suite and employers may want to offer more security to highly compensated executives as well. Flexible term life insurance plans, cash value options and portability features are a few options worth considering in 2010.
10. Hope is here.
Attitude is everything and even cautious optimism is still optimism. You'll notice the media are no longer using terms like "depression" or "gloomy" to describe our future. Indeed, the overall economic outlook has vastly improved from one year ago.
As you look to renew or initiate relationships with benefits providers, check the ratings of insurers you have done business with in the past or are considering working with in the future. You will find that there has been a lot of change. Many companies faced economic challenges in the past year. The strong ones are still standing. Ratings for financial strength and claims-paying ability are important; however, they do not reflect the performance of any registered securities or variable subaccount.
Getting retirement back on track
Let's face it, with the beating 401(k) account balances took over the past year or so, 2010 has to be the year to get back on track. After all, a lot of older workers really don't have the time to make up money lost.
Employers realize this and are trying to help. That's why, according to a recent survey from Hewitt Associates, about 80 percent of them have made plans to restore their company's 401(k) match this year.
"In the last 18 months, employees' 401(k) accounts took a serious financial hit due to the severe market downturn. Some of them also lost the additional retirement savings that their 401(k) employer match provided," explains Pamela Hess, director of retirement research for Hewitt Associates, which conducted the survey of 162 mid- to large-sized U.S. companies representing 5.7 million employees.
Employers simply don't have much confidence anymore in their workers' ability to save for retirement. Fifty-four percent are less confident about their workers' ability to retire with sufficient assets than they were in 2009. Less than one in five (18 percent) say they are very confident about their employees' ability to have enough retirement income to last throughout their retirement years.
To make things easier, employers are gaining interest in adding automated tools and investment features. Almost half (46 percent) of employers that do not already offer automatic rebalancing--a tool that helps employees regularly balance their portfolios with their target allocations--are very or somewhat likely to add it to their plan in 2010. Nearly four in ten (38 percent) are very or somewhat likely to add automatic contribution escalation--where employees can elect to have their contribution rates increased automatically over time.
Employers are also boosting investment services and tools. Half (51 percent) currently offer online investment guidance and another 42 percent are very or somewhat likely to do so in 2010. In addition, 28 percent of employers currently offer managed accounts, which allow workers to delegate the overall management of their accounts to an outside professional. Twenty-five percent of companies indicate they are very or somewhat likely to offer managed accounts in the coming year.
