The Effects of Financial Literacy on Financial Preparedness For Retirement Among Academic Staff In Higher Learning Institutions In The Kingdom of Eswatini
Keywords:
financial literacy, retirement, preparedness plan, academicAbstract
Objectives: The purpose of the study was to analyse the effects of financial literacy on financial preparedness for retirement among academic staff of higher learning institutions in the Kingdom of Eswatini.Prior work: Literature on personal finance suggests that employees reach retirement period with very little financial resources to support them in old age when they can no longer work. Life expectancy across the globe has increased recently and is still increasing due to advancements in science and discoveries of new drugs yet employees are still doing little to prepare for retirement. Little is known as to why employees are failing to plan for retirement when indicators show that they are likely to live longer than the previous generations. An investigation is therefore necessary to identify factors that influence financial preparedness for retirement.Approach: The study applied a quantitative methodology and a descriptive research design was adopted and used 144 respondents proportionately sampled from a population of 612 employees from higher learning institutions in Eswatini.Results: The study found that only knowledge of financial instruments significantly influences financial retirement preparedness for retirement.Implications: These findings suggest that awareness campaigns on financial products would increase financial preparedness for retirement.Value: This study contributes to the personal financial management literature by offering evidence on the relationship between financial literacy and financial preparedness for the retirement of the academic staff of institutions of higher learning in Eswatini.
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Lusardi, A. and Mitchell, O. (2011). Financial literacy and retirement
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Lusardi, A. Mitchell, O.S. (2008). Planning and financial literacy: How do
women fare? American Economic Review, 98(2), 413-417.
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Lusardi, A. and Mitchell, O. (2013). The economic importance of financial
literacy: theory and evidence. Doi:10.3386/w18952.
Lusardi, A. and Tufano, P. (2015). Debt literacy, financial experiences, and
over indebtedness. Journal of Pension Economics and Finance 14(4), 332-
368
Mitchell, O. (2017). Financial knowledge and key retirement outcomes: An
overview of the issue. Journal of Pension Economics and Finance, 16(3),
273-276. doi:10.1017/S1474747217000130
Monsor, M., Chor, C., Abu, A. and Shaari, M. (2015). Demographic factors
associated with retirement planning: A study of employees in Malaysia
health sectors. Asian Social Science, 11(13), 108-116.
Mullock, K. and Turcotte, J. (2012). Financial Literacy and Retirement
Saving. Working Paper, 1, Department of Finance, Canada.
Mustafa, A., Yusof, S., Silim, Adiman, R. and Hassan, N. (2017). Factors
Influencing Retirement Planning Behaviour of Lecturers in Polytechnics.
Advanced Journal of Technical and Vocational Education, 1(4), 09-13.
DOI: 10.26666/rmp.ajtve.2017.4.3
Nachmias, F., C. and Nachmias, D. (2004). Research methods in the social
sciences (5th ed.). London: Arnold.
OECD (2018). G20/OECD INFE Policy Guidance on Digitalization and Financial Literacy. Retrieved from www.oecd.org/going-digital.
President’s Advisory Council on Financial Literacy USA (2008). 2008
Annual Report to the President Executive Summary. Retrieved from
https://www.treasury.gov/resource-center/financial-
education/pages/advisory.aspx
Sang, L. T., Zatul K, Mail, R., Jamal, A., Osman, Z. and Mohidin, R.
(2014). An Investigation of the Level and Determinants of Financial
Literacy among Different Groups in Sabah. Universiti Malaysia Sabah,
Malaysia.
Statista, (2019). Life expectancy by continent 2018 | Statistic. Retrieved on
https://www.statista.com/statistics/270861/life-expectancy-by-continent/
Van Rooij, M., Lusardi, A. and Alessie, R. (2011). Financial Literacy,
Retirement Preparation and Pension Expectations in the Netherlands.
Working Papers. Center for Research on Pensions and Welfare Policies,
Turin, Italy. Retrieved from
https://www.dnb.nl/en/binaries/working%20paper%20313_tcm47-257145.pdf
Van Rooij, M., Lusardi, A. and Alessie, R. (2012). Financial Literacy,
Retirement planning and Household wealth. https://doi.org/10.1111/j.1468-
0297.2012.02501.x|
World Economic Forum. (2019). World Economic Forum Pension Report.
Retrieved June, 17, 2019, from https://www.weforum.org/minding-the-400-
trillion-pensions-gap.
Financial Preparedness for Retirement among Permanent and Pensionable
Employees in State Owned Corporations in Nairobi, Kenya. International
Journal of Business and Social Science. 8(11) 68-82.
https://ijbssnet.com/journals/Vol_8_No_11_November_2017/9.pdf
Alessie, R., Van Rooij, M. and Lusardi, A. (2011). Financial literacy and
retirement preparation in the Netherlands. Journal of Pension Economics
and Finance, 10(4), 527-545. doi:10.1017/S1474747211000461
Almenberg, J. and Save-Soderberg, J. (2011). Financial literacy and
retirement planning in Sweden. Journal of Pension Economics and Finance,
10(4), 585-598. doi:10.1017/S1474747211000497
Aluodi, E., Njuguma A. and Omboi, B. (2017). Effect of Financial Literacy
on Retirement Preparedness among Employees in the Insurance Sector in
Kenya. International Journal of Business and Management, 12, 10.
doi:10.5539/ijbm.v12n10p242
Bajtelsmit, V.L., Bernasek, A. and Jianakoplos, N.A. (1999). Gender
difference in defined contribution pension decisions. Financial Services
Review, 8, 1-10.
https://academyfinancial.org/resources/Documents/Abstracts/V8.pdf
Bagwell, S., Hestbaek, C., Harries, E. and Kail, A. (2014). Financial
capability outcome frameworks. https://www.thinknpc.org/wp-
content/uploads/2018/07/Financial-Capability-Outcome-Frameworks-
MAS.pdf
Baker, H., K.,, Kumar S., Goyal N. and Vidhu V., (2018) "How financial
literacy and demographic variables relate to behavioral biases",
Managerial Finance, https://doi.org/10.1108/MF-01-2018-0003
Banks, J. and Oldfield Z. (2007). Understanding Pensions: Cognitive
Function, Numerical Ability and Retirement Saving. Journal of Applied
Public Economics. 28(2) 143-170. Retrieved from
https://doi.org/10.1111/j.1475-5890.2007.00052.x|
Christelis, D., Japelli T. and Padula M. (2010). Cognitive abilities and
portfolio choice. European Economic Review. 54(1) 18-38.
https://doi.org/10.1016/j.euroecorev.2009.04.001
Clark, R., Lusardi, A. and Mitchell, O. (2017) Employee Financial Literacy
and Retirement Plan Behavior: A Case Study. Economic Inquiry, 55, 248-
259.
Field, A.P. (2009). Discovering statistics using SPSS 2nd edition. London:
Sage.
Financial Capability Framework (2018). Financial Capability Strategy for
UK. Retrieved from https://fincap.org.uk/en/articles/what-is-financial-
capability
Githui, T. and Ngare, P. (2014). Financial Literacy and Retirement Planning
in the Informal Sector in Kenya, International Journal of Education and
Research, 2(1,) 1-16. www.ijern.com/journal/January-2014/21.pdf
Hastings, J. and Tejeda-Ashton, L. (2008). Financial literacy, information,
and demand elasticity: Survey and experimental evidence from Mexico.
NBER Working Paper No. 14538, Cambridge, MA.
Hilgert, M. A., Hogarth, J. M. and Beverly, S. G. (2003). Household
financial management: The connection between knowledge and behavior.
Federal Reserve Bulletin, 309-322
Joo, S. and Pauwels, V. W. (2002). Factors affecting workers’ retirement
confidence: A gender perspective. Financial Counseling and Planning,
13(2), 1-10. https://www.afcpe.org/assets/pdf/vol1321.pdf
Keizi, L. K. (2006). Barriers to Pension Scheme Participation by Workers in
the Informal Economy. International Organization of Pension Supervisor,
1, 12-20.
Kimball, M. and Shumway, T. (2007). Investor sophistication, and the
participation, home bias, diversification, and employer stock puzzles.
University of Michigan, U.S.
Lubegu, S. M. (2012). Pschological preparation for retirement, Perceived
organizational support, Financial preparation for retirement, Employee
engagement and organizational citizenship behaviour in Uganda Revenue
Authority, Unpublished MBA Dissertation, Makerere University Business
School.
Lusardi, A. and Mitchell, O. S. (2007). Baby Boomer retirement security:
The roles of planning, financial literacy, and housing wealth. Journal of
Monetary Economics, 54, 205-224.
Lusardi, A. and Mitchell, O. S. (2008). Planning and financial literacy: How
do women fare? American Economic Review: Papers and Proceedings,
98(2), 413-417. https://doi.org/10.3386/w13750.
Lusardi, A. and Mitchell, O. (2011). Financial literacy and retirement
planning in the United States. Journal of Pension Economics and Finance,
10(4), 509-525. doi:10.1017/S147474721100045X.
Lusardi, A. Mitchell, O.S. (2008). Planning and financial literacy: How do
women fare? American Economic Review, 98(2), 413-417.
doi 10.1257/aer.98.2.413
Lusardi, A. and Mitchell, O. (2013). The economic importance of financial
literacy: theory and evidence. Doi:10.3386/w18952.
Lusardi, A. and Tufano, P. (2015). Debt literacy, financial experiences, and
over indebtedness. Journal of Pension Economics and Finance 14(4), 332-
368
Mitchell, O. (2017). Financial knowledge and key retirement outcomes: An
overview of the issue. Journal of Pension Economics and Finance, 16(3),
273-276. doi:10.1017/S1474747217000130
Monsor, M., Chor, C., Abu, A. and Shaari, M. (2015). Demographic factors
associated with retirement planning: A study of employees in Malaysia
health sectors. Asian Social Science, 11(13), 108-116.
Mullock, K. and Turcotte, J. (2012). Financial Literacy and Retirement
Saving. Working Paper, 1, Department of Finance, Canada.
Mustafa, A., Yusof, S., Silim, Adiman, R. and Hassan, N. (2017). Factors
Influencing Retirement Planning Behaviour of Lecturers in Polytechnics.
Advanced Journal of Technical and Vocational Education, 1(4), 09-13.
DOI: 10.26666/rmp.ajtve.2017.4.3
Nachmias, F., C. and Nachmias, D. (2004). Research methods in the social
sciences (5th ed.). London: Arnold.
OECD (2018). G20/OECD INFE Policy Guidance on Digitalization and Financial Literacy. Retrieved from www.oecd.org/going-digital.
President’s Advisory Council on Financial Literacy USA (2008). 2008
Annual Report to the President Executive Summary. Retrieved from
https://www.treasury.gov/resource-center/financial-
education/pages/advisory.aspx
Sang, L. T., Zatul K, Mail, R., Jamal, A., Osman, Z. and Mohidin, R.
(2014). An Investigation of the Level and Determinants of Financial
Literacy among Different Groups in Sabah. Universiti Malaysia Sabah,
Malaysia.
Statista, (2019). Life expectancy by continent 2018 | Statistic. Retrieved on
https://www.statista.com/statistics/270861/life-expectancy-by-continent/
Van Rooij, M., Lusardi, A. and Alessie, R. (2011). Financial Literacy,
Retirement Preparation and Pension Expectations in the Netherlands.
Working Papers. Center for Research on Pensions and Welfare Policies,
Turin, Italy. Retrieved from
https://www.dnb.nl/en/binaries/working%20paper%20313_tcm47-257145.pdf
Van Rooij, M., Lusardi, A. and Alessie, R. (2012). Financial Literacy,
Retirement planning and Household wealth. https://doi.org/10.1111/j.1468-
0297.2012.02501.x|
World Economic Forum. (2019). World Economic Forum Pension Report.
Retrieved June, 17, 2019, from https://www.weforum.org/minding-the-400-
trillion-pensions-gap.
Published
2020-09-29
How to Cite
Mndzebele , Z. W. ., & Kwenda, F. . (2020). The Effects of Financial Literacy on Financial Preparedness For Retirement Among Academic Staff In Higher Learning Institutions In The Kingdom of Eswatini: Array. Acta Universitatis Danubius. Œconomica, 16(5). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/585
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