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  • Subject area(s): Finance essays
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  • Published on: January 1, 2018
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Chapter one aims to introduce the overview of the research topic. This study to examine the determinants of financial retirement planning among Malaysian working adults. This chapter will discuss briefly on the research background, problem statement, research questions, research objectives, and significant of study of relevant hypotheses. In this chapter, there are also explanations of the dependent and independent variables as provided to discover the relationship of the variables mentioned. Lastly, this chapter is concluded with an outline of each chapter of the research.


This study focuses on the determinants of financial retirement planning among Malaysian working adults.

As shown in Appendix Figure 1; it’s been projected that elderly group aging from 60 to 80 years old will double/triple within 15 years and average life expectancy is approximately 75 years old in Malaysia (EPF, 2016). However, expectancy retirement age in Malaysia is between 55 to 60 years old (The Star Online, 2017). In Malaysia, latest survey by Randstad Work Monitor (2015) found that 76% of employees have to work longer than their current retirement age. 82% expect to retire between ages of 60-65. Not only that, EPF Head of Strategy Management Department Balqais Yusoff stated that only 22% of the 6.7 million Employees Provident Fund (EPF) active contributors aged 54 years have sufficient savings of RM196,800 or more to sustain themselves during retirement meanwhile other 78% of the contributors, unfortunately, did not have the basic amount for their retirement years (Bernama MalayMail Online, 2016).

Thereby, research found that most of households do not spare sufficiently for their retirement to keep up their pre-retirement way of live. The individuals who design enough for retirement normally are highly educated and from the high-wage background (Ridhwan, Mohamed, & Hisyam, 2017).


1.3.1 Research Problem Statement

This study analyses financial retirement planning among Malaysian working adults. A research conducted by Ibrahim, Isa & Ali in 2012 revealed the results of low level of awareness on the importance of retirement savings which shows that this issue was taken for granted by Malaysian employees. Furthermore, not many studies have investigated awareness of youths in financial products/services (Zabri, Ahmad, & Lian, 2016) probably due to infrequent timing of the purchases and complexity in streamlining product offerings by financial institutions (Nga, Yong, & Sellappan, 2017). More research with a bigger sample size and more variables should also be included to have clearer framework behind employee preference for the retirement age (Wahab, 2015).

According to Lee (2015), income and education have significant and positive effects on the decision to contribute to a pension fund. Not only that, he also stated that individual in their early 50’s is likely to have better financial retirement planning compared to individual in their late 50’s (Lee, An Analysis of Financial Preparation for Retirement: A Study of Retirement Preparation of Men & Women in Their Positive Savings Periods, 2015). Meanwhile, Millar & Devonish (2009) also indicated that some study shows different significant relationship between age towards financial retirement planning

The problem is it is unknown to what extent the determinants of financial retirement planning will impact the actual financial retirement planning among working adults in Malaysia. This study will examine on several factors which are financial literacy, demographic, goal clarity, and investment behaviour affecting the financial retirement planning. This study analyses financial retirement planning among Malaysian working adults. Retirement is a complex process which includes the preparation for retirement and decision to retire (Jung, 2011).


The approach embraced for this exploration involves the definition of several questions to determine the relationship of the variables mentioned in problem statement. The questions are classified into two categories which are major research question and specific research question. They are developed based on the variables of the research on theoretical framework.

1.4.1 General Research Question

What is the overall relationship between the determinants (Financial literacy, Demographic, Goal-clarity, and Investment behaviour) towards financial retirement planning among Malaysian working adults?

1.4.2 Specific Research Questions What are the determinants or factors affecting financial retirement planning behaviour among Malaysian employees? How impactful (in term of magnitude and direction) are each of determinants in affecting the retirement planning behaviour of Malaysian employees? How does retirement planning differ according to age group or income levels in affecting the retirement planning behaviour of Malaysian employees?


Research objectives have been developed based on the research questions above in order to guide the present study. It divided by two categories. Research questions and research objectives must be in line to get the final result of this research.

1.5.1 General Research Objective

To identify the relationship between the determinants (Financial literacy, Demographic, Goal-clarity, and Investment behaviour) towards financial retirement planning among Malaysian working adults.

1.5.2 Specific Research Objectives To investigate the determinants or factors affecting retirement planning behaviour. To examine the magnitude and direction of the impact of each factor on retirement planning behaviour. To find out whether retirement planning differs according to age group or gender or income levels.


From this study, certain phrase or terms are included to describe the concept of this research in simple explanation.


Retirement is a stage where a person is not in any kind of employment, business or occupation. Therefore, a person needs to have saving plan to cover their after-retirement expenses to live (Zabri, Ahmad, & Lian, 2016).


Financial literacy is about empowering and enlightening consumers so that they are knowledgeable about finance in a way that is relevant to their lives (Murugiah, 2016). Financial literacy can be explained as a set of knowledge, skills and attitudes in the sphere of people’s financial behaviour leading to improved well-being and quality of life. It is also a degree that understands key financial concepts, ability and confidence in managing personal finances through appropriate short-term solutions and long-term financial planning, considering life events and changes in economic conditions (Shanmugam & Abidin, 2010).


Demographic characteristic includes gender, generation, race and ethnicity, education, geographic region, age, income level, and marital status. However, in this research we only study for age and income level as the determinants under demographic factors (Lee, An Analysis of Financial Preparation for Retirement: A Study of Retirement Preparation of Men & Women in Their Positive Savings Periods, 2015).


Goal clarity means that individuals working towards well-specified goals to performed better than those working with no goals or those who were encouraged to do their best (Zabri, Ahmad, & Lian, 2016).


Investment behaviour are characterized as how the investors evaluation, forecast, investigate and audit the operations for decision making, which contain investment psychology, data assembling, characterizing and comprehension, exploration and analysis. The entire procedure is called “Investment Behaviour”. The factor that influences the estate investment behaviour is that not all investment is unexpected. Investors are taking part in speculation decisions in order to preserve ownership of the long-term or short-term outlook (Zabri, Ahmad, & Lian, 2016).


This study is to obtain as much information to have a better understanding on the determinants of financial retirement planning. In this research, it is assumed that there is strong relationship between the independent variables (financial literacy, demographic, goal clarity, and investment behaviour) with the financial retirement planning.

This research explains further on the determinants that will affect the financial retirement planning decision. The finding of this research is to increase awareness among working adults in Malaysia so that they are able to plan their financial retirement at an early stage. The government also can refer to this study to create awareness as an initiative to support the citizens in developing a better financial retirement planning for their afterlife.


The main purpose of this study is to analyse the determinants of financial retirement planning among Malaysian working adults. 250 questionnaires will be distributed among working adults in Malaysia specifically in Klang Valley and The Greater KL.


In chapter one, this paper introduces variables of financial retirement planning, financial literacy, demographic, goal clarity, and investment behaviour. This research also emphasizes on research background as well as the significance of relationship between the variables stated. Finally, the influence of the determinants towards financial retirement planning among Malaysian adults is summarized in this chapter therefore working adults in Malaysia can make a better decision in their retirement planning.



This part clarifies the theory connected for the exploration and find how every independent variable influences the dependent variable by checking on past literary materials related to the topic. In appraisal the literature on this area of study, it was found that that various studies have been carried related to the financial retirement planning across the world. However, there is very little that been carried out in Malaysia. This exploration paper has endeavored to incorporate all accessible material done within and outside Malaysia for reference and guides. The finding from empirical results of all available study will be explained the significance relationship of the variables in relation to financial retirement planning possible related to Malaysia.


The above framework is adapted from the framework created by Moorthy, et al. (2012) and became as the foundation of this examination. The framework is work out to expound the relationship of the independent variables and dependent variables.



A study conducted by Zabri, Ahmad, & Lian (2016) to establish the relationship between the retirement planning behaviour and the various factors affecting the retirement planning practices. According to them, the results show that age, education level, income level, goal clarity, attitudes towards retirement and potential conflict in retirement are among factors affect the retirement planning.


Several studies have used the life-cycle model of savings as a basis for analysing the effects of various socio-demographic events on retirement economic well-being (Lee, 2015). According to Lee also stated that income does not necessarily flow into the family at the rate necessary to meet current expenditures. Thus, there will be periods in the life cycle when expenditures exceed income.

According to Moorthy, et al.(2012) stated that demographic factors does influence a better retirement planning. However, according to Millar & Devonish (2009) stated that age and gender does not give impact to retirement planning but income does give impact to financial retirement planning.

H1: Demographic does have a statistically significant relationship with financial retirement planning.


Recent studies found that, the deficiencies of financial literacy are found to be widespread phenomenon at a global level an is also distinctly proved in developing nations such as the United State (Murugiah, 2016). The research also stated that studies conducted especially at developed economies prove that, financial literacy has become one of the major components of sound financial decision-making and provides significant implication to financial behaviour. Most of the studies that had been conducted said financial literacy always has an impact towards financial retirement planning (Millar & Devonish, 2009).

H2: Financial Literacy does have a statistically significant relationship with financial retirement planning.


Goal clarity affected the retirement planning behaviour of working individual. It was found that working individuals should hold a clear goal for retirement planning which is both achievable and attainable (Zabri, Ahmad, & Lian, 2016). According to Zabri, Ahmad, & Lian (2016) also stated that goal clarity does affect the retirement planning and it deals with quality for life in retirement.

Besides that, according to Moorthy, et al.(2012) expressed that retirement goal clarity is a significant predictor of planning practices and predicting savings tendencies.

H3: Goal clarity does have a statistically significant relationship with financial retirement planning.


According to Murugiah (2016), a study conducted revealed Singaporeans’ have healthy attitudes and financially literate towards managing their savings and investments. Most of the Singaporeans active in making savings, always record their spending and does some basic financial planning. However, Murugiah (2016) also stated that Americans’ have low levels of financial knowledge, as well as insufficient saving and high indebtedness.

However, there was a study conducted by Jamal, Ramlan, Karim, Mohidin, & Othman (2015) found out that financial attitude is not significantly related to students’ savings behaviour which is they accept the null hypothesis in their research conducted.

H4: Investment behaviour does have a statistically significant relationship with financial retirement planning.


In summation, this chapter reviewed most of the of the accessible literature from previous researcher’s findings on the theme as well as the dependent and independent variables chosen for this examination. This review is used as a basis and support for the day.



This chapter covers the framework of research being conducted in this present study. This chapter explains on the research design, approach, strategy and a discussion on the sample selection. A complete methodology is further discussed in this chapter on hypotheses testing to find the significance to financial retirement planning.



The research background used in this study is positivism philosophy. Positivism philosophy is a model that is generated from the nature of knowledge. This philosophy is not affected by the act of investigating it and it is completely dependent on the assumption of social reality being objective and singular. Positivism view also involves theories providing explanation on establishment of causal laws by creating causal relationships between the variables and linking them to a deductive theory.


This research is based on by collecting primary data from the samples to represent population. The method used to obtain the data is by survey using questionnaire to allow collection of standardized data for participants to respond to the same set of questions from a sizeable population in order to have easy comparison. Online questionnaires were distributed through social medias at a cost effective and easier manner to collect quantitative data to be analysed using descriptive and inferential statistics.

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