Age Cohort Effect on Financial Planning Preparation

Tan Hoe Kock,Folk Jee Yoong,Choong Kwai Fatt

doi:10.5539/jms.v2n2p18

Abstract

This paper examined age cohort effect on financial planning preparation. A total of 670 questionnaires were distributed with a 53.6% return rate. Four hypotheses were analysed using hierarchical and stepwise regression analysis. The results revealed that age cohort variables made significant contribution to financial planning preparation as well as personal orientation towards retirement planning, particularly the younger age cohort. Age cohorts do affect personal orientation towards retirement planning with the confidence level making a significant impact. Current financial resources do have a strong positive impact on consumption for all age cohorts. On the other hand, no significant effect was found between age cohorts and current financial resources but older age cohorts were relatively more significant predictors.

Highlights

There is a growing trend around the world where the primary responsibility for providing an adequate retirement income has shifted from governments and employers to the individuals
The results revealed that age cohort variables made significant contribution to financial planning preparation as well as personal orientation towards retirement planning, the younger age cohort
The survey results indicate that current financial resources do have an impact on positive orientation towards retirement planning for those in the younger age group

Summary

Introduction

There is a growing trend around the world where the primary responsibility for providing an adequate retirement income has shifted from governments and employers to the individuals. Pension plans are shifting from the defined-benefit form to defined-contribution, in which plan participants must make investment decisions. With longevity increasing, replacing defined pension plans with defined contribution plans are making social security arrangements less certain. The very complex problem of saving and investing to provide for a secure retirement income is being transferred to the individuals who may not have either the knowledge or the training to handle the task. The most obvious pitfall in self-retirement planning is that it shifts all retirement-planning risks – not saving enough, making poor investment choices, outliving savings – to untrained individuals. The amount of financial resources they possess influence how much they will spend over their life cycle (Tan & Folk 2011)

Methods

Results

Conclusion