With such a massive year approaching, including an Olympic Games campaign, Michelsen said it was important to keep their momentum under Hager going.
"You wouldn't want to lose a coach heading into such an important year, when we need to continue developing."
The Black Sticks had six weeks off following the Oceania Cup and resumed training last week.
It was a much-needed break for the girls, who will be hopeful of selection in the 2012 Champions Trophy squad, named on Monday.
Michelsen is one of seven Northland-born current Black Sticks squad members (Michelsen, Jan Burrows, Ella Gunson, Charlotte Harrison, Sam Harrison, Alana Millington and Anna Thorpe) who will vie for selection in the team to contest the Champions Trophy in Argentina at the end of January.
"I'm nervous about being selected - you never feel safe as you never know quite what he [Hager] is going to do with selection ... it will be awesome if I am though, considering we did so well at this year's competition where we finished third," Michelsen said.
Hager is a Queenslander, but his family are settled in Albany with three daughters at school on the North Shore and he said the way in which the hockey community has welcomed them helped his decision to stay - along with the results he has achieved with the women's side.
"These players have real potential for the future. The last two years has been a learning curve, but if we stay together I think this group can achieve some really outstanding results in the future.
"I really enjoy coaching this group, they are very receptive to learning and they have reached some important milestones in the last couple of years," he said.
Although Hager has taken the team from 12th to the sixth ranked team in the world, he said the biggest highlight is seeing the players develop skills and achieve top results.
"When you have players like Stacey Michelsen and Charlotte Harrison being nominated by their peers and world coaches for 2011 FIH Young Player of the Year and Kayla Sharland named in the 2010 FIH All Stars Team, that is a real buzz," he added.
Hager's contract will be reviewed at the conclusion of the 2014 World Cup.
Hager is Australia's highest goal scorer (179 from 231 games) having played for the Kookaburras for 11 years.
His coaching history includes Australia's national junior men's and women's head coach, as well as Australia's national men's and women's assistant coach.