A Study on Retirement Preparedness and Confidence among Private Sector Employees in Malaysia

Abstract

Retirement planning is particularly significant for an individual since it ensures that the individual's financial demands are met during the post-retirement period. A good plan prior to retirement is associated with significantly higher life satisfaction after retirement, given that many people spend a significant portion of their lives after a lengthy employment period. Personal retirement planning, on the other hand, is up to the individual. To ensure a comfortable retirement, employees must make a deliberate decision to set aside some of their earnings. However, past studies on retirement planning show that workers in Malaysia have made little or no preparation for their retirement. They only realize the need for retirement preparation when their savings are not enough to cover post-retirement expenses. Therefore, the main purpose of this study is to investigate the effects of attitude towards retirement, goal clarity, social influence, and financial literacy on the preparedness and confidence of private sector employees in Malaysia. Aside from that, the study intends to compare employees' retirement preparedness and confidence by gender as well as age group. The data for this study was collected through the use of a questionnaire. This study used ordered probit regression to see the effect of the determinants on retirement preparedness and confidence. The results of the study showed that attitude towards retirement, goal clarity, social influence, and financial literacy have a significant positive effect on retirement preparedness and confidence. Apart from that, male employees are found to be more prepared and confident to retire compared to female employees. Finally, employees between the ages of 31 and 40 are the most prepared and confident in their ability to retire. The study's findings have important implications for the retiring population in order for them to plan ahead of time so that they can survive throughout their retirement phase.