The Role of Self-Efficacy in Explaining Psychological and Financial Preparation for Retirement: A Behavioural Study of Retirement Transitioning in Uganda

Abstract

The individual’s level of perceived self-efficacy could be an important driver for early retirement preparation. Most employees in Ugandan organisations reach that age of retirement without sufficient knowledge on how they will survive during their post-retirement life. This study sought to examine whether self-efficacy predicts psychological preparation and financial preparation for retirement. The sample of 924 employees aged 24–60 years selected voluntarily from four three service-oriented organisations participated in this study. Confirmatory factor analysis was run to confirm whether the factor indices (latent variables) extracted from exploratory factor analysis were actually measures of psychological preparation and financial preparation for retirement. Structural equation modelling was used to test regression relationships, and correlation between latent variable of the dependent constructs was tested using Pearson product moment correlation coefficients. The findings indicated a four-factor model for psychological preparation and a two-factor model for financial preparation. Self-efficacy predicted only three factors of psychological preparation and finance management mediated the relationship between self-efficacy and personal initiative. With these findings, it was concluded that individuals with capacity to adapt new changes can easily re-engage in other jobs. Similarly, those concerned with their social identity will focus on developing career skills that would yield the same level of importance in society. However, finance management training is crucial to the development of strategies and competences that empower people to maintain satisfying lifestyles after retirement. Finally, self-efficacy is a driving factor of personal initiative but the relationship is reinforced when finance management competences are acquired.