The Influence of Attitude, Subjective Norms and Perceived Behavioral Control on Retirement Preparation: A Case of Gen Y in Selangor, Malaysia

  • Logananthiny Kumaraguru
  • Caroline Geetha

Abstract

The most important factor in a comfortable post-retirement life is preparing for retirement. This study is an attempt to examine the factors which influence the retirement preparations of Gen Y in Selangor, Malaysia. The theory of planned behavior (TPB) has been used to develop a conceptual model to investigate the relationship between attitude, subjective norms, perceived behavioral control, and retirement preparation. The sample in this study comprises a convenience sampling of Gen Y aged 24 to 41 years old. A questionnaire was used as an instrument to collect data in this study and a total of 384 responses were collected via an online survey. As predicted by the structural equation model, attitudes and perceived behavioral control are positively correlated with preparation towards retirement among Gen Y, while subjective norms have no positive correlation. The results of this study will lead Gen Y and other parties involved to realize that sustaining income after retirement requires early preparation. In order to obtain a better understanding of influencing factors on the preparation towards retirement, this research will benefit future researchers, the government, insurance industries, and investment companies.

References

Abd Samad, S., & Mansor, N. (2017). Population ageing and social protection in Malaysia. Malaysian Journal of Economic Studies, 50 (2), 139-156. acceptance. Long Range Planning, 46 (1/2), 1–12.
Adams, G. A., Prescher, J., Beehr, T. A., & Lepisto, L. (2002). Applying work-role attachment theory to retirement decision-making. The International Journal of Aging and Human Development, 54 (2), 125-137.
Agunga Mourine, A. (2017). Financial Literacy and 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).
Ajzen, I. (1985). From intentions to actions: A theory of planned behavior. In Action control . Springer, Berlin, Heidelberg.
Ajzen, I. (1991). The theory of planned behavior. Organizational behavior and human decision processes, 50 (2), 179-211.
Ajzen, I. (2002). Perceived behavioral control, self‐efficacy, locus of control, and the theory of planned behavior 1. Journal of applied social psychology, 32 (4), 665-683.
Ajzen, I. (2006). Constructing a theory of planned behavior questionnaire.
Ajzen, I. (2008). “TPB bibliography”. Retrieved from www.people.umass.edu/aizen/TPBrefs.html on 4 March 2020.
AL Ziadat, M. T. (2015). Applications of Planned Behavior Theory (TPB) in Jordanian Tourism. International Journal of Marketing Studies, 7(3), 95–106.
Ali, S. (2013). Financial literacy in Malaysia: Issues and status update. Paper presented at the International Seminar on Financial Education and Retirement Savings. Retrieved from http://www.kwsp.gov.my/portal/documents/10180/5509861/01_- _Financial_Literacy_in_Malaysia_Issues_and_Status_Update.pdf on 29 October 2020.
Andrade, C., Bazelais, W., & Das, N. (2014). The effect of financial literacy on retirement planning. Retrieved from http://www.academyfinancial.org/wpcontent/ uploads/2014/01/B2_Andrade_Bazelais_Das.pdf on 7 February 2021.
Asher, M. A. (2000). Further development and validation of the Scoliosis Research Society (SRS) outcomes instrument. Spine, 25 (18), 2381-2386.
Asian Institute of Finance. (2015). Finance matters: Understanding Gen Y — Bridging the gap of Malaysian millennials. Retrieved from https://www.aif.org.my/clients/aif_d01/assets/multimediaMS/publication/Finance_Matters_Understanding_Gen_Y_Bridging_the_Knowledge_Gap_of_M alaysias_Millennials.pdf on 23 February 2019.
Bagozzi, R. P., Fornell, C., & Larcker, D. F. (1981). Canonical correlation analysis as a special case of a structural relations model. Multivariate Behavioral Research, 16 (4), 437-454.
Bailey, J., Nofsinger, J., & O’Neill, M. (2004). 401(k) retirement plan contribution decision factors: The role of social norms. Journal of Business and Management, 9 (4), 327- 344.
Berkowitz, L. (1972). Social norms, feelings, and other factors affecting helping and altruism. In Advances in experimental social psychology (Vol. 6, pp. 63- 108). Academic Press.
Beshears, J., Choi, J. J., Laibson, D., Madrian, B. C., & Milkman, K. L. (2015). The effect of providing peer information on retirement savings decisions. The Journal of Finance, 70 (3), 1161-1201.
Bongini, P., & Cucinelli, D. (2019). University students and retirement planning: never too early. International Journal of Bank Marketing, 37 (3), 775-797.
Botetzagias, I., Dima, A. F., & Malesios, C. (2015). Extending the Theory of Planned Behavior in the context of recycling: The role of moral norms and of demographic predictors. Resources, Conservation and Recycling, 95 , 58– 67.
Butrica, B. A., Goldwyn, J. H., & Johnson, R. W. (2005). Understanding Expenditure Patterns in Retirement.” CRR Working Paper No. 2005‒03.
Chai, W. Y., Chin, S. T., Lee, S. L., Lum, S. K., & Yeo, T. H. (2019). Perception of youth on the retirement planning in Malaysia (Doctoral dissertation, UTAR).
Cronan, T. P., & Al-Rafee, S. (2008). Factors that influence the intention to pirate software and media. Journal of Business Ethics, 78 (4),527-545.
Croy, G., Gerrans, P., & Speelman, C. (2012). Psychological determinants of retirement savings behaviour: An application of the theory of planned behaviour. Lambert Academic Publishing, Edith Cowan University.
Cucinelli, D., & Bongini, P. (2019). University youth and retirement planning: never too early. International Journal of Bank Marketing.
Davis, K., & Hustvedt, G. (2012). It’sa matter of control: Saving for retirement. International Review of Social Sciences and Humanities, 3 (2), 248-261.
Duflo, E., & Saez, E. (2002). Participation and investment decisions in a retirement plan: The influence of colleagues’ choices. Journal of public Economics, 85 (1), 121-148.
Duflo, E., & Saez, E. (2003). The role of information and social interactions in retirement plan decisions: Evidence from a randomized experiment. The Quarterly journal of economics, 118 (3), 815-842.
Dushi, I., & Webb, A. (2004). Household annuitization decisions: Simulations and empirical analyses. Journal of Pension Economics and Finance, 3 (02), 109-143.
Etikan, I., Musa, S. A., & Alkassim, R. S. (2016). Comparison of convenience sampling and purposive sampling. American journal of theoretical and applied statistics, 5 (1), 1-4.
Feldman, D. C. (1994). The decision to retire early: A review and conceptualization. Academy of management review, 19 (2), 285-311.
Fishbein, M. (1979). A theory of reasoned action: some applications and implications.
Folk, J. Y., Beh, L. S., & Baranovich, D. L. (2012). Financial education: Determinant of retirement planning in Malaysia. Journal of Business Management & Economics, 3 (2), 69-78.
Furnham, A., & Tankel, M. P. G. (2015). Understanding savings , pensions and life assurance in 16 – 21-year-olds. Human Relation, 55 (5), 603–628.
Garg, N., & Singh, S. (2018). Financial literacy among youth. International Journal of Social Economics, 45 (1), 173-186.
Griffin, B., Loe, D., & Hesketh, B. (2012). Using proactivity, time discounting, and the theory of planned behavior to identify predictors of retirement planning. Educational Gerontology, 38 (12),877-889.
Guiso, L., & Jappelli. T. (2005). “Households Financial Information Acquisition and Portfolio Choice.” (CEPR Working Paper).
Guiso, L., Sapienza, P., & Zingales, L. (2008). Trusting the stock market. Journal of Finance, 63 (6),2557-2600.
Habib, S. (2007). Counting on the nest egg. Retrieved from http://thestar.com.my/news/story.asp?file=/2007/5/27/nation/17754089&s ec=nation on 12 December 2018.
Haider, S. J., & Stephens, Jr., M. (2007). Is there a retirement-consumption puzzle? Evidence using subjective retirement expectations. The review of economics and statistics, 89 (2), 247-264.
Haider, S.J. & Stephens, M. Jr. (2006). How accurate are expected retirement savings? MRRC Working Paper 2006-128. University of Michigan.
Hair, J. F. Jr., Hult, G. T. M., Ringle, C. M., Sarstedt, M. (2014). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Sage Publications. ISBN: 978-1-4522-1744-4. 307.
Hair, J. F., Jr., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19 (2), 139–151.
Hair, J. F., Jr., Ringle, C. M., & Sarstedt, M. (2013). Partial least squares structural equation modeling: Rigorous applications, better results and higher.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing theory and Practice, 19 (2), 139-152.
Haron, H., Razali, N. N. S. M., & Mohamad, F. (2019). Factors influencing financial planning retirement amongst employees in the private sector in east coast Malaysia: Literature review and research agenda. KnE Social Sciences, 1115-1129.
Heenkenda, S. (2016). Readiness to retirement planning of estate sector employees in Sri Lanka.
Hershey, D. A., & Henkens, K. (2014). Impact of different types of retirement transitions on perceived satisfaction with life. The Gerontologist, 54 (2), 232-244.
Hira, T. K., Rock, W. L., & Loibl, C. (2009). Determinants of Retirement Planning Behaviour and Differences by Age. International Journal of Consumer Studies, 33 (3), 293–301.
Hunt, L. (2009). Planning for retirement. Retrieved from http://biz.thestar.com.my/news/story.asp?file=/2009/4/4/business/3618400 &sec=bus iness. on 2 January 2019.
Hwang, T., & Gao, S. (2003). The determinants of the demand for life insurance in an emerging economy–the case of China. Managerial Finance, 29 (5/6), 82- 9.
Ibrahim, D. K. A., & Wahat, N. W. A. (2015). A new pathway towards retirement preparation: Integration of holistic life planning. European Journal of Social Science Education and Research, 2 (4), 154-160.
Ibrahim, D., Isa, Z. M., & Ali, N. (2012). Malaysian Savings Behavior towards retirement planning. In Proceedings of 2012 International Conference on Economics Marketing and Management.
Jaafar, R., & Daly, K. J. (2016). Reviewing the financial soundness of the Malaysia's Employees Provident Fund. In International Conference on Economics, Management and Corporate Social Responsibility (EMCSR'16), 7-8 January 2016, Kuala Lumpur, Malaysia (pp. 14-18).
Jamaludin, N. (2012). Individual retirement savings behaviour: evidence from Malaysia.
Johnson, D. P. (2017). How Attitude Toward the Behavior, Subjective Norm, and Perceived Behavioral Control Affects Information Security Behavior Intention. Walden University. Retrieved from http://scholarworks.waldenu.edu/dissertations on 3 June 2020.
Joo, S. H., & Grable, J. E. (2005). Employee education and the likelihood of having a retirement savings program. Financial Counseling and Planning, 16,37-49.
Jorgensen, B. L., & Savla, J. (2010). Financial literacy of young adults: The importance of parental socialization. Family relations, 59 (4), 465-478.
Kamri, K. A., Suhaimy, K. A., & Isa, K. (2015). Kesepaduan sosial Polis Diraja Malaysia (PDRM).
Kart, C. S., & Kinney, J. M.( 2001). The realities of aging: An introduction to gerontology.
Kaur, B., & Hassan, Z. (2018). Impact of age, gender, income, education and financial literacy towards retirement planning among generation'Y'in Malaysia. International Journal of Education, Learning and Training, 3 (1).
Ketkaew, C., Van Wouwe, M., Vichitthamaros, P., & Teerawanviwat, D. (2019). The effect of expected income on wealth accumulation and retirement contribution of Thai wageworkers. SAGE Open, 9 (4), 2158244019898247.
Kock, T. (2015). Financial Planning For Post Retirement Among Urban Malaysians In Klang Valley. 1st ed. [ebook] Kuala Lumpur. Retrieved from http://studentsrepo.um.edu.my/5920/1/TAN_HOE_KOC K_2015.pdf on 4 March 2020.
Krejicie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities. Educational and Psychological Measurement, 30, 607–610.
Lusardi, A. (2006). Financial literacy and financial education: Review and policy implications. NFI Policy Brief, (2006-PB), 11.
Lusardi, A., & Mitchell, O. S. (2007). Baby boomer retirement security: The roles of planning, financial literacy, and housing wealth. Journal of monetary Economics, 54 (1),205- 224.
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of economic literature, 5 2(1), 5-44.
MacLeod, P., Fitzpatrick, A., Hamlyn, B., Jones, A., Kinver, A., & Page, L. (2012). Attitudes to pensions: The 2012 survey. Department of Work and Pension: Research Report, 813, 1-162.
Madden, T. J., Ellen, P. S. and Ajzen, I. (1992). A Comparison of the Theory of Planned Behavior and the Theory of Reasoned Action. Personality and Social Psychology Bulletin 18, 3–9.
Mahdzan, N. S., & Tabiani, S. (2013). The impact of financial literacy on individual saving: An exploratory study in the Malaysian context. Transformations in Business & Economics, 12 (1), 41–55.
Masran, M. A., & Hassan, H. H. (2017). Factors Affecting Retirement Planning Of Gen-Y Workers In Klang Valley Private Sectors, Malaysia.
Moorthy, M. K., Durai, T., Chelliah, L., Sien, C. S., Leong, L. C., Kai, N. Z., & Teng, W. Y. (2012). A Study on the retirement planning behaviour of working individuals in Malaysia. International Journal of Academic Research in Economics and Management Sciences, 1 (2), 54.
Nelson, A. (2014). Using the Theory of Planned Behavior to Predict Infant Restraint Use in Saudi Arabia. Loma Linda University.
Nga, K. H., & Yeoh, K. K. (2018). An exploratory model on retirement savings behaviour: A Malaysian study. International Journal of Business and Society , 19 (3), 637-659.
Nosi, C., D’Agostino, A., Pagliuca, M., & Pratesi, C. A. (2017). Securing retirement at a young age. Exploring the intention to buy longevity annuities through an extended version of the theory of planned behavior. Sustainability, 9 (6), 1069.
Power, M. L., & Hira, T. K. (2004). University‐Provided Retirement Planning
Rameli, R. S., & Marimuthu, M. (2018). A Conceptual Review on the Effect of Attitudes towards Retirement on Saving Intentions and Retirement Planning Behavior. In SHS Web of Conferences (Vol. 56, p. 02005). EDP Sciences.
Rogowski, J., & Karoly, L. (2000). Health insurance and retirement behavior: evidence from the health and retirement survey. Journal of Health Economics, 19 (4), 529-539.
Ruxyn, T. (2017). Bank Negara reveals the 4 biggest mistakes malaysians make when it comes to money. Retrieved from http://says.com/my/news/banknegara- malaysia-reveals-worryingfindings-on-financial-literacy-amongmalaysians on 18 February 2019.
Schagen, S., & Lines, A. (1996). Financial literacy in adult life: a report to the Natwest Group Charitable Trust (pp. 36-45). NFER.
Secord, P. F., & Backman, C. W. (1965). An interpersonal approach to personality. Progress in experimental personality research, 2, 91-125.
Sekaran, U. (2003). Research methods for business: a skill building approach. 4th ed., John Wiley & Sons Inc., 2003.
Sekaran, U. (2006). Research methods for business: A skill building approach. John Wiley & Sons.
Shim, S., Barber, B. L., Card, N. A., Xiao, J. J., & Serido, J. (2010). Financial socialization of first-year college students: The roles of parents, work, and education. Journal of youth and adolescence, 39 (12), 1457-1470
Skinner, J. (2007). Are you sure you're saving enough for retirement?. Journal of Economic Perspectives, 21 (3), 59-80.
Stein, M. K. (2000). The proof is not in the pudding. Journal of Financial Planning, 13 (9): 40–43.
Tan, H. K. (2015). Financial planning for post-retirement among Urban Malaysians in Klang Valley/Tan Hoe Kock (Doctoral dissertation, University of Malaya).
Tannahill, B. A . (2013).'Retirement Plans Can Provide Last-Minute Income Tax Deductions', Journal Of Financial Service Professionals, 67 , 2, pp. 35-39.
Thung, C. M., Kai, C. ing, Nie, F. S., Chiun, L. W., & Tsen, T. C. (2012). Determinants of saving behaviour among the university students in Malaysia. Universiti Tunku Abdul Rahman, 109.
Topa, G., Moriano, J.A., & Moreno, A. (2012). Psychosocial determinants of financial planning for retirement among immigrants in Europe. Journal of Economic Psychology, 33 (2012), 527-537.
Tyler, S. (2008). Cowen on Monetary Policy, EconTalk.org Podcast no. 69, 17 March.
Van Dalen, H. P., Henkens, K., & Hershey, D. A. (2010). Perceptions and expectations of pension savings adequacy: A comparative study of Dutch and American workers. Ageing & Society, 30 (5), 731-754.
Van Dam, K., Van der Vorst, J. D., & Van der Heijden, B. I. (2009). Employees' intentions to retire early: A case of planned behavior and anticipated work conditions. Journal of Career Development, 35 (3), 265-289.
Visyalini, S. (2018). Financial literacy education and retirement planning of the urban elderly in Malaysia/Visyalini Selvadurai (Doctoral dissertation, University of Malaya).
Warshawsky, M. J., & Ameriks, J. (2000). How prepared are Americans for retirement?. Forecasting retirement needs and retirement wealth, 33-67.
Widyastuti, U., Suhud, U., & Sumiati, A. (2016). The impact of financial literacy on student teachers’ saving intention and saving behaviour. Mediterranean Journal of Social Sciences, 7 (6), 41–48.
Wöhrmann, A. M., Deller, J., & Wang, M. (2014). A mixed-method approach to post-retirement career planning. Journal of Vocational Behavior, 84 (3), 307- 317.
Yong, C. C., Yew, S. Y., & Wee, C. K. (2018). Financial knowledge, attitude and behaviour of young working adults in Malaysia. Institutions and Economies, 10 (4).
Yusof, R., Sabri, M. F., Rahim, H. A., & Jusoh, Z. M. (2018). Examining the Behavioural Intention to Save in a Voluntary Retirement Fund in Malaysia. Malaysian Journal Of Consumer and Family Economics VOL. 21.
Zandi, G., Torabi, R., Yu, O. T., Sivalingam, A. D., & Khong, T. T. (2021). Factors Affecting The Intention of Generation Y in Malaysia to Invest for Retirement. Advances in Mathematics: Scientific Journal 10 (2021), no.3, 1485–1507.
Zappalà, S., Depolo, M., Fraccaroli, F., Guglielmi, D., & Sarchielli, G. (2008). Postponing job retirement? Psychosocial influences on the preference for early or late retirement. Career development international, 13 (2), 150-167.
Zulaikha Arfudi, I. (2015). 50% Retirees Exhausted Their Savings Within Five Years Of Retirement, How Can You Avoid This? [online] Malaysian Digest. Retrieved from http://www.malaysiandigest.com/features/585044-50 retirees-exhausted-their-savings-within-five-years-ofretirement-how-canyou- avoid-this.html on 6 June 2020.
Zulfaka, A., & Kassim, S. (2021). Retirement Awareness Among The Working Population Below 40 In Malaysia. Journal of Islamic Finance, 10, 101-110.
Published
2021-10-01
How to Cite
KUMARAGURU, Logananthiny; GEETHA, Caroline. The Influence of Attitude, Subjective Norms and Perceived Behavioral Control on Retirement Preparation: A Case of Gen Y in Selangor, Malaysia. International Journal of Advanced Research in Economics and Finance, [S.l.], v. 3, n. 3, p. 219-238, oct. 2021. ISSN 2682-812X. Available at: <https://myjms.mohe.gov.my/index.php/ijaref/article/view/15713>. Date accessed: 20 may 2024.
Section
English Section