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1. Introduction 1.1 Background of the Study Nowadays, the population of employees and future retirees in Malaysia is increasing rapidly.

The reality hits when people find that they cannot afford to retire because they had not seriously put aside the money in their early life (Habib, 2007). Individuals are encouraged to start planning for their later life of their retirement especially during their golden year and not only nearly the retirement. The Statistics of Labour Force, Malaysia, January 2010- series 7/ March 2010 showed that the number of employed person rose by 3.4 percent in January 2010 to 11.1875 million compared with 10.817 million in January 2009. As this situation continuing, the number of pre-retirees will increase in the future. Therefore, retirement planning becomes an essential issue of our life. Do individuals think about and plan for retirement? Malaysians are less of confidence about preparing retirement plan due to the financial illiteracy (Hunt, 2009). Besides, the president of Life Insurance Association of Malaysia (LIAM), Ng Lian Lau estimates less than 5% ready for retirement in Malaysia (Habib, 2007). 1.2 Problem Statement Many view the pre-retirees and workers as woefully unprepared for their golden years. Bernheim (1992) suggested they was saving just one-third of what they needed to retire comfortably. In fact, Warshawsky and Ameriks (2000) predict that fully half of all individuals’ ages 25-71 years will not have sufficient savings to support themselves in retirement. Although retirement does not seem to be a phenomenon that is restricted to industrialized countries, in many developing countries there is continuity in older people’s participation in the labor world, which is a sign that retirement has not been completely institutionalized (Szinovacz, 2003).

Such financial illiteracy is widespread. 2007). 2009 found that only few studies that investigated age differences in retirement planning. And the truth is at 55. Hira. mortgages. working individuals may not be familiar with even the most basic economic concepts needed to make sensible saving and investment decisions. Rock and Loibl. In general. 2007). the result from an extensive search of the current literature. With insufficient knowledge on how to manage their income. the result might be no proper saving planning for their afterlife of retirement. and those who are 55 feel it is just too late for them. and other decisions. in construct. Hershey (2004) argues that although demographic factors have an influence on retirement saving decisions. retirement planning. Ng Lian Lau of Life Insurance Association of Malaysia (LIAM) says that those in their 20s think they are too young to think about retirement.Many households are unfamiliar even the most basic economic concepts needed to make saving and investment decisions (Lusardi & Mitchell. two research questions are addressed: (1) Is the retirement planning behavior of working individuals affected by different age groups? (2) What are the factors influencing retirement planning behavior? The objectives of our study . younger generation of working individuals might think that retirement planning is burden for them because involve long-term planning.3 Research Questions and Objectives In this study. while those in their 30s and 40s tend to believe they are doing enough because they have their EPF savings. most people cannot afford to retire (Habib. psychological factors also have direct effect on savings decisions. the young and older citizen in Malaysia will appear woefully under-informed about basic financial concepts. with serious implications for saving. 1. In general.

(2) to examine whether other demographic variables are relative importance for retirement planning. Chapter 3 discusses the samples design. 1.5 Outline of the Study The remaining sections of the proposal are organized as follows: Chapter 2 presents the research problem theories. (3) to determine the role of psychological variables in retirement planning behavior.4 Significance of the Study Our study might benefit the society especially working individuals acknowledge the importance of the retirement in people’s lives (Rosenkoetter & Garris. so from this study the audience might found out when is the suitable timing to start the retirement planning. The retirement planning always becomes an important issue in our country. Timing might play an important in making retirement planning successfully. 1998). They may have a clearer picture about the factors that might affect their behavior of the retirement planning. the government could refer this study what is the current situation in order to support the citizen in developing a better environment in their afterlife of retirement. methodology of data collection of this research. .are: (1) to examine the retirement planning behavior of working individuals from different age groups. Thus. (4) to determine the characteristic of the demographic variables. theoretical framework and issues or propositions of the research. 1.

As we divide the working individuals into three groups according their age. This theory claims that facts are based on and directed by symbols (Aksan. Kisac. Through the symbolic interaction theory. and is guided by what they do.1 Theory/ Concept Symbolic interaction theory is one of the several theories in the social sciences and was applied in this study. 1975). the self concept is developed. language and thinking. gestures. the founder of symbolic interaction theory. Role is collections of expectations that define regularized patterns of behavior within family life. The concept of norm seems to identify unambiguously a clear-cut and ubiquitous element of social life (Blake & Davis. Literature Review 2. Petras & Reynolds. 2009). interaction. Every groups or norms have its rules that it hardly identified as a whole. 1964). There are role. People become unique individuals through their interaction with others. According to this theory. they might have different thinking and . people live both in the natural and the symbolic environment and focuses attention on the way that people interact through symbols such as words. The working individuals are the target sample in our study. it is not fixed and might influence by someone for examples teachers and friends. group or social organization. we might know the perspective of working individuals toward the proximity of retirement planning. Through the process of interaction and communication with others. The self concept is the image we have of who and what we are. Aydin & Demirbuken. culture and norm (Meltzer.2. It also emerges through the process of communication and interaction. which are meaning. There are five concepts in symbolic interaction theory. self. Culture refer that the behavior in some way takes into account the other person. rules and roles. There are three core principles in symbolic interaction perspective of Blumer.

As the result. 2. 2004).002 individuals that their age 25 and older in the United State of America. The survey is done through the 20-minutes telephone interview among 1. When the interaction among the individuals is successful. the individuals’ retirement confidence tend to be higher than others as they calculated their retirement fund needs and had more savings. The level of confidence will increase as the higher household income and provided that they are better health. The higher level of confidence will be achieved. job classification and age were significant variable in the retirement. The objective of retirement should be regulated to expand the quality of the retirement plan.perspective toward the retirement planning among them.2 Past Empirical Studies According to Kim. The working individuals those are more knowledgeable about the retirement planning tends to influence other individuals from his point of view. This provided information will increase the retirement satisfaction by using a balanced portfolio approach that targeted in women and union. The survey was conducted via telephone interview among 1. the attitude of individuals will influence their behavior on making decision in retirement planning. The employer should provide the retirement information and advice that are highly valued service for the employees in order for them to do the retirement planning earlier in their career (Power & Hira. planning practices. Kwon and Anderson (2004).609 . the retirement planning might become a culture of society. if those invest in government programs such as Social Security and Medicare. the way of their thinking might influence the group among them due to the social interaction process. Moreover. The predictors of satisfaction in this study gender. The working individuals who received workplace financial education and advices will help them have more confidence toward retirement planning.

which is a representative survey of Americans over the age of 50. the result suggests that only individuals: (1) demographic. A questionnaires survey was conducted in Australia. and (2) health. A questionnaire survey was conducted to track assets. A wise planner can enjoy their retirement life with large amount of wealth compare with those who is not ready for retire because planning is strongly positively associated with higher total net worth of individuals. liabilities. Lusardi et al. This showed .eligible employees by sample frame and 660 individuals were selected by fractional systematic sampling in the United State of America. retirees neglected retirement planning because they have certain level of difficulty in adjusting to retirement. This study used standard economic model of wealth accumulation to coordinate with consumption decisions. health and patterns of wellbeing in older households to compare the experiences of Early Baby Boomer cohort in the 51-56 age range on the sample size of 2634 households. probability of selling house to finance retirement and others. This survey was conducted based on Health and Retirement Study (HRS). 394 respondents out of 918 respondents responded on the questionnaires which yielding a response rate of 43%. investment. Psychosocial: (1) work centrality influences have no significant impact on retirement planning behavior in an integrated model. In the findings. (2007) shown that planners accumulate large amounts of wealth than non-planners through saving. This shown that individuals predictors can be defined as individuals characteristic which can relate to our study has a significant influence towards retirement planning behavior. According to Wong and Earl (2009). Joo and Pauwels (2002) indicated that for those who are younger and who have higher level of education reported a higher retirement confidence. and organizational: (1) conditions of workforce exit influences predict a better retirement planning.

the level of financial assets (excluding IRA/KEOGH and defined contribution values). This survey found that academics exhibited positive attitudes toward money and income appears to be the prime motivator. which is conducted by the America Employee Benefit Research Institute and this survey targeted on 1002 individual workers via 22-minute telephone calls survey. Lai. the result showed that female academics and those from public universities had more positive attitudes toward retirement.that younger generations have an early retirement planning or could represent false confidence due to they believe they have enough time for their retirement planning. The payment for children’s education was the key potential conflict area. A questionnaire survey that inclusive a series of questions regarding money attitudes and retirement planning was personally investigated towards 458 academics in 16 universities in Malaysia. and other private pension funds significantly lower the planned the planned retirement age. This study used the data from 1999 Retirement Confidence Survey. education and age across the annual income levels from academics’ perspectives. Levels of financial assets and nonfinancial assets lower the planned retirement age is relatively more than levels of IRA/KEOGH accounts or defined-contribution pension plans. the age is inversely related to the probability of the currently full-time people from 35 to 70 years old and the most noticeable declines occurring after the age 50. Montalto. Lai and Lau (2009) found that there are significant difference between teaching position. For planned retirement age variable. nonfinancial assets. Meanwhile. Yuh and Hanna (2000) found that for the working full-time variable. This study used 1995 Survey of Consumer Finances (Kennickell. Starr-McCluer & . The results of this survey suggested the universities provide retirement planning assistance and pre-retirement counseling to the academics.

The risk tolerance is marginally significant influenced the saving provided those with a short time perspective and high in knowledge. 1997) to interview 1. 1999). and financial risk tolerance are all important variables when it comes to understanding individuals’ retirement saving practices (Jacobs-Lawson & Hershey.781 retired individuals from the first wave of the HRS. Marital status. Planning activities imply a higher likelihood of satisfaction even those whose retirement decisions were not made voluntarily (either through health problems or an employer mandate). 2005). and pre-retirement occupation as well as the retirement planning have an impact on the level of the retirement satisfaction. Thinking about retirement and attending planning meetings have a significant positive impact with the level of satisfaction (Elder & Rudolph. there are no relationship between risk tolerance and saving for those who were both low in time perspective and knowledge. whether the individual was forced retires. level of education. For three-way interaction. Individuals in households with higher incomes and larger net worth are predictably. The data were collected through questionnaire of 270 working adults. Hershey and Jacobs-Lawson (2007) indicated that retirement goal clarity is a significant predictor of planning practices. members of a large household data panel maintained by a major international market research firm in America. Risk tolerance is significant influenced the saving tendencies. health status.607 head of household age from 35 to 70 years who were currently working full-time in the United States. and planning. The future time perspective. more likely to be satisfied. for those who are high in future orientation and either high or low in knowledge. financial knowledge. Stawski. The interactions are not only limit individually but also in combination with one another.Sunden. in turn to prdict . This study is conduct through questionnaire with 1.

This study found that income and age were also revealed to be important elements of the model with income accounting for roughly half of the explained variance in savings contributions. both of which were designed to predict savings contributions. One-hundred adults served as voluntary participants in this study and the data were collected through questionnaire. Path analysis techniques were used to test two competing models. .savings tendencies.

5.2. 2. Education level is significant related to retirement planning behavior. Age group is significant related to retirement planning behavior. Income level is significant related to retirement planning behavior. 3. 6. Goal clarity is significant related to retirement planning behavior. Attitude toward retirement is significant related to retirement planning behavior.3 Hypothesis Development 1. 4. 2.4 Proposal Conceptual/Framework Age Group Education level Income level Goal Clarity Retirement Planning Behavior Potential conflict in retirement planning Attitude toward retirement Figure 1 Conceptual framework . Potential conflict in retirement is significant related to retirement planning behavior.

the working individuals reached age 26 are work for few years and have some working experience and savings. which are 26 to 35. The selected areas of this study in Malaysia are Kuala Lumpur.3. Due to the equally chances of each working individual from 26 to 55 years old being selected among the population in Malaysia is unknown. working individuals are divided into 3 age groups. The data collected in this study can be used to suggest possible reasons for the relationship between the factors that going examine with retirement planning. In this study. This study used survey strategy that collects quantitative data through questionnaire. Selangor. Sampling of this study is limited to working individuals from 26 to 55 years old. Quota sampling is used to select the data from a large population of working individuals. . Normally. Research Method 3. This is cross-sectional study due to at a particular time. 3. thus the population sample in this study is start from age 26. 2007) in order to explain the relationship between the factors with the retirement planning. Ipoh and Johor. The emphasis is on studying why most people cannot afford to retire at 55 (Habib. This is able to overcome the variations between groups to ensure their availability for survey. By using a standardized questionnaire questions for all the samples that we want to analyze in order to answer our research question. 36 to 45 and 46 to 55 years old and each group’s sample size will be 100.2 Population sample and Sampling Procedures A total of 300 working individuals will participate in this study. as a result the sampling technique is non-probability sampling. Quota sampling is useful to stratify the data and allows us to divide the working individuals into specific groups.1 Research design This study is an explanatory research that establishes causal relationships between variables.

marital status. The dependent variable is retirement planning behavior. The type of questionnaire that selected in this study is delivery and collection questionnaire which is under self-administered questionnaire. married. Lewis & Thornhill. The participants need to complete the questions and it will be collected back on the spot. 2009). Variables that provide demographic information are age. and (3) potential conflicts in retirement planning. Nominal is the measurement scale for age of the working individuals (26-35. Although this might adds to costs and it is time consuming. investment instruments.4 Variables and Measurement In this study. (2) education level.3 Data Collection Method This study is conducted by collecting the primary data from the samples to represent the working individuals. Each participant is asked to respond to the same set of questions. (2) attitude toward retirement. ethnicity. it provides an efficient way in collecting responses from a large sample of working individuals to quantitative analysis. gender. and 46-55). divorced. gender (male and female). and widow). number of children. which are demographic variables: (1) age. marital status (single. but the high response rates are achievable as high as 98 per cent (Saunders.3. This type of questionnaire might increase level of confident to receipt the responses back because the questionnaire questions are delivered by hand to each respondent and collected back later. number of children (1- . and (3) income level and psychology variables: (1) goal clarity. The method that used in collecting data is the questionnaire technique. education level and income level. 36-45. there are six independent variables and one dependent variable in testing the hypothesis. are categorized under categorical group. 3. The independent variables are divided into two sections.

India and others) and investment instrument (unit trust. Financial preparation for retirement (1= very good. property. 5= very poor). RM 1. stock.000.000. RM 5. master’s degree. The attitude toward retirement scale contains four items adapted from Lai et al. RM 3. Hershey and Jacobs-Lawson (2007) designed to measure level of retirement goal clarity (Appendix). All the items in this scale with its response format: 1.000.000 and below. All items from this scale uses a five-point response format (1= very important. long-term care insurance. savings. bond. (2009) designed to assess the individuals’ opinion toward the retirement (Appendix). diploma. For education level and income level. where 1= strongly agree and 5= strongly disagree. The potential conflicts in retirement planning are measured using a six-item scale adapted from Lai et al. 7-9) ethnicity (Malay. Chinese. The education level are divided into seven groups. Retirement planning behavior is measured using a three-item scale (Warren & Rossiter-Base. 5= very unimportant). Income level are divided into six categories. Each of the items uses a five-point scale ranging from 1 (strongly agree) to 5 (strongly disagree). there are ordinal data.000 and More than RM 9.001 – RM 3. 2004) with a different five-point Likert scale designed to evaluate individuals’ behavior toward the retirement planning.001 – RM 7. fixed deposit. Goal clarity is measured using a five-item scale adapted from Stawski.001 – RM 5. 4-6.3. RM 1. 2. (2009) designed to indicate the perceived potential conflicts in retirement planning (Appendix). Expectations of standard of living in retirement (1= slightly increase. PhD and others. estate and foreign currency).001 – RM 9. secondary. RM 7. All items from this scale uses a five-point response format. 5= . which are primary school.000. bachelor’s degree /professional.

which are demographic and psychological variable. A multiple regression analysis is used to conduct this study to analyze the data. For inferential analysis. 5= very unconfident). this study is conducted by using correlation for testing the relationship between the variables. the independent variables are divided into two sections. . it is used to determine whether there is a positive. This analysis is not enough to prove whether the relationship is significant in testing the hypothesis. and 3. Confidence in achieving a decent standard of living in retirement (1= very confident. it is used to analyze the significant independent variables that influence the retirement planning behavior of the working individuals. By using the multiple regression analysis.decrease). 3. negative relationship provided strong or weak or no relationship. In the descriptive analysis table.5 Data Analysis Techniques Descriptive statistic is used to describe the characteristics of the data collected in the sample profile or the variables.

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