Financial Preparedness For Retirement Research Articles

The impact of financial literacy on financial preparedness for retirement among formally employed individuals in Zimbabwe

Purpose: Changes in global retirement systems have necessitated greater personal responsibility for making retirement financial decisions. The main purpose of this study is to evaluate the effect of financial literacy on the financial preparedness for retirement among the formally employed in Zimbabwe. Research Methodology: The study adopted a positivist philosophy and an explanatory research design. Questionnaires were used to collect data from a target population of employees in Bindura, Zimbabwe. The final sample consisted of 384 participants. The independent variable, financial literacy, was measured using knowledge of financial instruments and computational capabilities of retirement benefits. Data were analyzed by multiple regression analysis using SPSS version 25. Results: The findings show a statistically significant relationship between knowledge of financial instruments and financial preparedness for retirement at the 5% significance level. The computational capabilities of retirement benefits are found to have no effect on financial preparedness for retirement. Limitations: Other factors that affect financial preparedness, such as demographics and financial factors, were not included in the model. Contribution: This study addresses retirement preparedness, which is one of the least-researched areas of personal finance in Zimbabwe. Therefore, the results are useful for policymakers to enhance the framework of retirement financial literacy.

Caregiving, health status and total family net worth among men and women approaching retirement age

ABSTRACT Background and Objectives: Building on opportunity cost theory and an understanding of how gender impacts household labor decisions, this study examines how family net worth may be impacted by three variables (having a work-limiting health condition, caregiving inside the home, caregiving outside of the home) while controlling for demographic and employment-related variables for married and unmarried male and female caregivers. Research Design and Methods: This study uses a nationally representative sample of 5,173 older adults ages 51-60 from the 2016 round of 1979 National Longitudinal Survey of Youth (NLSY79). Results: Findings from the weighted sample suggest having a limiting health condition is significantly and negatively related to total family net worth: people with a work limiting health condition experience a $55,000-$180,000 decline in total family net worth. Further, caregiving inside the home had a significant negative relationship with total family net worth for two subgroups: married males and unmarried females. Providing care to someone outside the home was significantly and positively related to total family net worth only for unmarried males. Discussion and Implications: Findings from this study reinforce the need for policies and programs to help employees manage their own health conditions and caregiving responsibilities for family members with financial preparedness for retirement.

Does Length of Time Caregiving Affect Net Worth? Caregivers Approaching Retirement Age

Using a nationally representative sample of N=3,659 adults (mean age 55.6 in 2016) from the 2008, 2012, and 2016 rounds of the National Longitudinal Survey of Youth 1979, we examine the impact of work-limiting health conditions, caregiving, and the length of time spent in a caregiving role inside and outside the home on total family net worth. Repeated measures analysis finds having a chronically ill or disabled household member (CIOD), or caring for a household member with a CIOD inside the home was associated with reduced total family net worth (TFNW; -$146.7, p<0.002), on average, across the three time periods. In-home caregiving across time periods does not have an additive effect, but rather appears to result in a one-time drop in TFNW. Respondents who provide care for out-of-home family or friends report higher TFNW on average over time ($73.3K, p<0.001). Respondents with a work-limiting health condition report a lower mean TFNW over this time span (-$53.1K, p<0.005). Caregiving inside the home has 2-3 times the impact on TFNW as having a work-limiting health condition, though in the overall model, the effect of the two variables together on TFNW is additive. An adult is at the greatest disadvantage with respect to financial preparedness for retirement if they are both a caregiver (or have a CIOD in their household) and have a work-limiting health condition than if they have only one of these characteristics or have neither characteristic. Even a single time period of caregiving reduces total family net worth over time.

The Effects of Recognition of Retirement Responsibility on Financial Retirement Preparedness: Focusing on Moderating Effects of Income-level

The Effects of Recognition of Retirement Responsibility on Financial Retirement Preparedness: Focusing on Moderating Effects of Income-level

The Impact of Financial Literacy on Financial Preparedness for Retirement in the Small and Medium Enterprises Sector in Uganda

The study investigated the direct effects of financial literacy (knowledge, skills, and attitudes) on financial preparedness for retirement and the moderating effect of age among the small and medium enterprises in Uganda. Primary data was collected from a sample of n = 380 selected from the SME workforce. Descriptive analysis was run on SPSS, while validity and reliability of the measurement items yielded satisfactory composite reliability scores and average variance explained (AVE) scores for all items. Structural equation modelling (SEM) was used to test the hypotheses and multi-group analysis conducted to test for the moderating effect of age on the relationship between financial literacy and retirement preparedness. The results revealed that knowledge and skills were significant predictors of retirement preparedness. However, ‘attitude' was not a significant predictor, and age had no moderating effect on the relationship between the study variables. These findings present practical implications for policymakers and financial educators in a developing country context.

Exploring Adequate Retirement Funding in South Africa: A KwaZulu-Natal Financial Planner’s View

The development of several social demographic and economic trends have created the interest among financial analysts and the general population in planning for retirement. By the year 2021 the number of South Africans past retirement age will be an estimated 4.4 million which should account for approximately 7.3% of the country’s population (currently 3.8 million or 6.8% of the population) (Statistics South Africa, 2016). The increase in South Africa’s population at large and longer retirement periods have raised questions about financial preparedness for retirement. Economic issues such as corporate downsizing, capped employer retirement contributions, changing of jobs for greater remuneration and increased daily living costs have shifted the responsibility for retirement financial well-being from employers to individuals. Adequate retirement provision does not necessarily only affect the retiree but also the family unit of the retiree as a whole, as the vast majority of households in developing countries such as South Africa rely solely on one breadwinner. A global financial planning survey “was conducted by the FPI in 2015. The survey shows that only 38% of South Africans are confident that they will achieve their financial life goals, with 55% indicating that they do not know where to start with financial planning Financial Planning Institute of South Africa (2015), Gustman et al. (1995), as sited in Greninger et al. (2000) reported that, “there is no consensus in literature regarding the definition of retirement. If we do not understand the meaning of retirement, is it possible to judge whether a population is financially prepared?” This question underlines the importance of gathering informative qualitative data such as goals and risk tolerances and quantitative data, in order to develop a capital needs analysis to establish how clients can successfully meet their retirement goals. This paper aims to explore the role of the Financial Planner in the retirement planning process.

Household Portfolios and Financial Preparedness for Retirement

Using a lifecycle model of consumption, saving and portfolio choice combined with linked survey and administrative data on wealth and lifetime earnings we evaluate measures of retirement preparedness. We estimate heterogeneous discount factors for households and compare the estimates of their patience to their replacement rates { the simple measure of- ten used to evaluate the adequacy of retirement savings. We find first that the specification of the model’s asset structure matters quantitatively for preference parameter estimates { households appear to be much more patient when they are assumed to have access only to a risk-free asset compared to when we account for the fact that much of their wealth is stored in higher-return tax-advantaged private pensions and in housing. Second we find that only the most patient households achieve the replacement rates out of final earnings that are often recommended by policy-makers and industry as sensible benchmarks for retirement preparedness. Notwithstanding this, we find that even quite impatient households in the population we study achieve high replacement rates out of lifetime average income - a more sensible summary measure of preparedness for retirement.

Household portfolios and financial preparedness for retirement

Using a lifecycle model of consumption, saving and portfolio choice combined with linked survey and administrative data on wealth and lifetime earnings we evaluate measures of retirement preparedness. We estimate heterogeneous discount factors for households and compare these estimates of their patience to their replacement rates—the simple measure often used to evaluate the adequacy of retirement savings. We find first that the specification of the model's asset structure matters quantitatively for preference parameter estimates—households appear to be much more patient when they are assumed to have access only to a risk‐free asset compared to when we account for the fact that much of their wealth is stored in higher‐return tax‐advantaged private pensions and in housing. Second, we find that only the most patient households achieve the replacement rates out of final earnings that are often recommended by policymakers and industry as sensible benchmarks for retirement preparedness. Notwithstanding this, we find that even quite impatient households in the population we study achieve high replacement rates out of lifetime average income—a more sensible summary measure of preparedness for retirement.

RETIRING AND CAREGIVING IN THE AGE OF STUDENT LOANS: THE IMPACT OF STUDENT DEBT ON RETIREMENT AND LONGEVITY PLANNING

Saving for retirement and the ability to provide care for a loved one can be dramatically affected by student loan debt. Currently, approximately 44 million people of all ages in the United States carry the weight of over 1.4 trillion dollars of student loan debt. Student loan borrowers of all ages may experience lower financial preparedness for retirement as well as decreased ability to provide care for family members, including aging parents. While older adults hold a relatively small proportion of student loans, they are the fastest growing subset of student loan borrowers and have disproportionately high rates of student loan defaults. As a result of their defaults, the Social Security retirement benefits of Americans ages 65 and older experienced a 500% increase in offsets over the last decade. This presentation will spotlight an MIT AgeLab mixed methods study about how student loan borrowers between the ages of 51 and 75 experience student loans within family systems and perceive and prioritize longevity planning in light of their student loans. Data collected for this study include focus groups and a large national survey. Preliminary findings suggest that for older borrowers, student loans are generally one of several financial constraints that can inform spending and saving decisions. For most, student loan payments are regarded as stunting overall retirement savings while the minority regard the two separately. Older borrowers also tend to have increased financial and familial responsibilities, including caring for aging parents, that compete for borrowers’ limited financial and temporal resources.

Analyses on the determinants of elderly workers' plans to retire and desired retirement age

This study analyses the determinants affecting elderly workers' plans to retire and their desired retirement age, in order to better understand and prepare for their retirement and establish supportive policies. Eighteen years of personal data and additional survey data, provided by the Korean Labor & Income Panel Study, were used for this study. The results of the analysis showed that factors having a significant impact on elderly workers' plans to retire were gender, age, marital status, gross annual earned income after taxes in the past year, subjective health conditions, employment status, financial preparedness for retirement, level of social participation, and overall life satisfaction. The research also revealed that gender, age, education level, marital status, subjective health condition, employment status, and level of social participation impact desired retirement age. Based on the above research results, discussions are offered on policy implications.

Analyses on the determinants of elderly workers' plans to retire and desired retirement age

This study analyses the determinants affecting elderly workers' plans to retire and their desired retirement age, in order to better understand and prepare for their retirement and establish supportive policies. Eighteen years of personal data and additional survey data, provided by the Korean Labor & Income Panel Study, were used for this study. The results of the analysis showed that factors having a significant impact on elderly workers' plans to retire were gender, age, marital status, gross annual earned income after taxes in the past year, subjective health conditions, employment status, financial preparedness for retirement, level of social participation, and overall life satisfaction. The research also revealed that gender, age, education level, marital status, subjective health condition, employment status, and level of social participation impact desired retirement age. Based on the above research results, discussions are offered on policy implications.

Long-Term Effects of Leaving Military Service in a Weak Economy

Previous research finds negative effects in the short and medium term for those who initially entered the labor force during weak labor markets. Discerning the effects of initial market conditions is difficult as young workers may attempt to time their entry by, for example, spending additional time in school during weak markets. In this paper, we take advantage of a novel form of exogenous variation that affected a large group of older workers to study longer-term effects of entering labor markets during bad economic times. Using the Health and Retirement Study, we focus on veterans from the draft era and examine the effects of leaving military service during periods of high unemployment on earnings, wealth, and retirement. These men had little choice about the timing of entry into the labor force; they generally were drafted or volunteered based on world events, and they left the military at the end of fixed contracts after short terms of service. Our results indicate that draft-era veterans who entered the labor force during a weaker economy had lower levels of earnings, and the effects lasted for more than a decade. We also find that while veterans who enter weak labor markets eventually catch up with other veterans in terms of earnings, the accumulated negative effects on wealth and financial preparedness for retirement are large; we find some evidence that veterans compensate by extending their working lives.

Retirement saving and mental health in China.

The Chinese population is aging rapidly while both the pension system is underdeveloped and the traditional family care arrangement is in retreat. This article's objective is to assess the relationship between concerns over retirement saving sufficiency and the mental health status of middle-aged and older Chinese adults, and identify the socioeconomic and demographic profile of those with insufficient retirement savings. A survey from about 2000 respondents collected information on self-assessed physical and mental health status based on the EQ-5D-5L framework, self-assessed longevity, retirement plans and financial preparedness and socioeconomic status. Multivariate ordered logistic regressions are used to identify the relationship between mental health status, financial preparedness for retirement and self-assessed longevity, as well as socioeconomic factors associated with mental health status and financial preparedness for retirement respectively. It is found that 59% of the respondents thought that they have not saved, or will not be able to save enough for their retirement. For these people, the odds of having less anxiety or depression are 0.36 (95% CIs: 0.16-0.43) times lower than those who are financially prepared. Having more external sources of financial assistance including family and governments, did not help ease mental distress. Rural people are half as likely to be financially prepared for retirement, regardless of whether they remain in rural areas or migrate to cities. Health promotion strategies should consider the role for financial planning in improving mental health.

Labor Force Transitions at Older Ages: The Roles of Work Environment and Personality

Besides compensation and financial incentives, several other work-related factors may affect individual retirement decisions. Specifically, job characteristics such as autonomy, skill variety, task significance and difficulty, stress and physical demands, peer pressure and relations with co-workers, play a crucial role in determining psychological commitment to work at older ages. While financial preparedness for retirement and health shocks are often cited as main predictors of the choice to exit the labor force, there exists relatively little research documenting the extent to which the work environment itself and its interaction with economic variables influence retirement decisions. We document that job characteristics are associated with labor force transitions at older ages, in particular transitions to retirement and part-time employment. Additionally, we show that while personality traits do not directly drive labor force transitions, the effect of job characteristics on labor supply outcomes varies with the “intensity” of personality traits. We also document that job characteristics themselves are strongly related to personality traits. This suggests that, depending on their personality, individuals may select into specific jobs, whose characteristics ultimately shape their retirement paths.