What drives working adults to be better prepared for their retirements?

Abstract

PurposeThis study aims to understand the drivers that help working adults to be better prepared for retirement, by examining the relationship between financial literacy (FL), financial attitude (FA), financial well-being (FWB), financial behavior (FB) and retirement preparation (RP). RP includes multidimensional measures, which are retirement confidence, retirement planning, long-term financial planning and private retirement schemes (PRS) participation.Design/methodology/approachThis was a quantitative study adopting non-probability sampling with self-administered questionnaire distributed to all working adults. Descriptive analysis was used to examine the 294 useable data, and the multiple logistic regression analysis was adopted for hypothesis testing.FindingsThe empirical results show that FB is positively associated with RP and then followed by FWB on retirement confidence. Although insignificant influence is found on FL and FA, better FL and FA will still improve individuals' RP.Research limitations/implicationsThe study provides insights to working adults that practicing positive FB and good FWB will improve RP. Besides, for financial institutions, income level is the main determinant for consumers to participate in PRS; for policy makers, to incorporate financial attributes knowledge as part of the school curriculum since early school years.Originality/valueThis study is one of the few studies in Malaysia that explored FL, FA, FB and FWB on retirement planning, respectively.

How Financial Literacy and Lifestyle Affect Employee Retirement Planning?

“…Retirement preparation [10] is a form of acceptance, alert-ness, and willingness by individuals due to changes that are no longer working, manifested in the form of behaviour. According to [11] those who have retired but participate in certain activities or continue to work can reap a variety of benefits, including the ability to live a longer, healthier, and more prosperous retirement than those who have retired but have no substitute job or activity.…”

Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends

“…Furthermore, several authors discuss determinants of retirement planning in addition to financial literacy. Chua and Chin [187] examined the relationship between financial literacy, financial attitude, financial well-being, financial behavior and retirement preparation. The empirical evidence indicated that financial behavior is positively associated with retirement preparation; in addition, they found that financial well-being positively effects retirement confidence.…”

Unraveling the impact of financial literacy on investment decisions in an emerging market

“…Financially literate individuals better understand financial instruments and their terms, rendering them more adept at making well-informed investment decisions (Grohmann et al, 2018). They exhibit stock market participation intentions (Mirzaei & Buer, 2022), save funds for rainy days (de Bassa Scheresberg, 2013), have their retirement plans in place (Chua & Chin, 2022), and therefore experience comparatively greater financial satisfaction (Sconti, 2022). FL not only enhances personal financial well-being but also improves firm performance (Anwar et al, 2020;Saeed, 2024).…”