Good day. Employers are getting in tune with the idea of overall financial wellness, aiming to up the ante on their employee benefits as a result — in fact, they're expected to spend 6.5% more on benefits this year. But can you guess what the total expected spend per employee is? a. $8,000 b. $12,200 c. $13,800. Follow the wave 🌊 below for the answer. Here are the topics for today: - Rate Hikes Are Likely to Resume
- The Most Wanted Employee Benefits Right Now
- Plan For Student Loan Repayments
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ECONOMY Rate Hikes Are Likely to Resume | | | | From 1971 through 2023, the federal funds rate in the U.S. averaged 5.42%, which is higher than where we sit now after 10 high-stepped rate hikes. Meaning? The rates we grew accustomed to from 2008 through 2021 were a historical anomaly, and where we are now is kind of…normal, and going even higher wouldn't be so unusual. But the Fed pressed pause on their opportunity to hike in June, leaving some wondering the obvious — are the rate hikes over? Jerome Powell says no. Resuming course - The latest: Inflation peaked at 9.1% just over a year ago, and the Fed has managed to curtail it to 4% in that time frame. The numbers are a bit misleading on the surface, but the tightening cycle has made a lot of progress nonetheless.
- The Fed took a pause during the month of June to reflect on how far the economy has come, and consider what route they should take from here. Some may have mistakenly taken this to mean that the Rate hikes are done, or at least dwindling, but Fed Chair Jerome Powell and other board members say otherwise.
- Powell's thoughts: In his exact words, JP said "Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," He then went on to call the estimate of 2 more rate hikes this year "a pretty good guess of what will happen if the economy performs as expected." and noting that the Fed is making their decisions on a "meeting-by-meeting" basis at this point.
- Estimations: The current federal funds rate sits at a target range of 5% to 5.25%, so two additional hikes this year would bring us up to a 5.5% to 5.75% target range by year's end.
- Implications on markets: Thus far, markets have digested the Fed's 2023 actions with ease as major indexes find themselves up healthily, led by tech and AI hype. Going forward, it seems unlikely that a couple more quarter-point rate hikes could derail this rally, considering how far we've come. Simultaneously though, it's impossible to predict the markets and other, future catalysts that remain unknown for now.
- And for other rates: For borrowers, this would keep the prime rate elevated and in the 8% to 9% range, meaning rates on mortgages, auto loans, personal loans, and credit cards will continue to inch up. For savers though, this is great news, and could mean even higher APYs on your savings by 2024.
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FINANCIAL PLANNING The Most Wanted Employee Benefits Right Now | | | | High-quality employee benefits are something all of us long for when sorting through potential employers. And it makes sense, these add-ons can make a massive difference in our finances both long and short-term. With financial wellness in focus more so now than ever, a greater emphasis is being placed on benefits too — but which ones do employees value the most? Most wanted — benefits edition - Insurances: Perhaps not the most interesting of the list, but the most essential nevertheless. The most recent data reveals that almost half (49%) of Americans get their health insurance through their employer, meaning employees are extremely reliant on their careers for access to high-quality care and coverage.
- Flexibility: The nature of work is changing. Remote and hybrid working arrangements have become the norm now, and our everyday lives and work are becoming increasingly intertwined. As a result, employees find themselves desiring flexibility, mostly in the form of PTO and flexible working arrangements that allow them to work from home when needed. In fact, a recent survey from FlexJobs found that 80% of respondents would be more loyal to their employer if they were granted flexible work options.
- Career development: No one wants to land a position and be stuck without any progression, asking themselves — is this it? Employees desire professional development opportunities as well, and there's a big gap here that employers can fill by offering access to training, education, certifications, and more.
- Mental health benefits: The American Psychology Association found that 81% of people would prioritize job offerings from workplaces that actively support their mental health. For the longest time, it hasn't been considered standard to have mental health benefits baked into your health coverage. Luckily, this is changing. As mental health continues to get more of the attention it deserves, employees desire benefits that meet their needs in this area.
- Financial wellness resources: No matter how you feel about buzz words, the truth is that sometimes they're for the greater good — financial wellness is one of those words. The pandemic set off a domino effect in finance, making it something that's okay to talk about openly, and resulting in both employers and employees alike taking a more holistic approach to their financial wellbeing. The demand is there — people want benefits like access to planners, advice, education, and other resources to support them in managing their money, and employers are stepping up.
Take this related lesson and earn 🟡 Dibs: | | | |
MONEY TIP Plan For Student Loan Repayments | | | | Student loan repayments and interest accrual has been in suspension for what seems like ages — dating back to March 2020. This fall though, that longstanding moratorium will finally come to a close as a result of an agreed-upon provision in the debt ceiling deal. Student loans will resume accruing interest on September 1st, and payments will begin coming due on October 1st. We've had three years of student loans being in limbo, and a streak of uncertainty regarding forgiveness that will continue through the summer. Now that things seem to be returning to normal though, it's time to enact a plan to handle the return of their repayments. Tips to handle this - Go ahead and pay it off in full: Going this route could save you a lot on interest if you can afford to do it, and is worth the risk if you believe it's unlikely the debt will ever be absolved by the government during the period yours is due.
- Think about refinancing or consolidating: Interest is a thing again, so if you find a private lender that offers a stand-out rate in exchange for refinancing with them and you don't have any unique benefits tied to your federal student loans (i.e., access to loan forgiveness and special repayment plans), it's certainly an option worth looking into.
- Budget for it: Debt repayments should always be included in your monthly budget just like any other expense, and student loans are no longer an exception to the rule. By allocating a portion of your budget to the payments, you avoid any surprises at the end of the month and reduce the risk of overspending.
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🌊 BY THE WAY | - 👤 Answer: $13,800. Up from $13,200 per person in 2022, U.S. employers are expected to spend 6.5% more this year according to data from 700 U.S. employers (Aon)
- 🏦 Do-it-all influencer Jake Paul raises $35M with sports betting startup "Betr" (Axios)
- 📝 ICYMI. Financial Questions to Pop Before Saying I Do (Finny)
- 📦 Amazon starts using small businesses to help with package delivery volume (Engadget)
- 📊 Finny lesson of the day. Demand for employee benefits is on the rise, but are you taking full advantage of yours? In order to maximize your benefits, it's first important to understand what you've got:
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| Advisory services are offered through Origin Financial, a Registered Investment Adviser registered with the U.S. Securities and Exchange Commission. The status of registration as an Investment Adviser does not imply a certain level of skill or training. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor, is it intended to be a projection of current or future performance or indication of future results. | | | | | | | |
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