Local Studies

Mandell (2006) defined financial literacy as is what people must know in order to make important
financial decisions in their own best interest.

https://media.neliti.com/media/publications/115171-EN-financial-literacy-of-college-students-d.pdf

Financial literacy is knowledge and understanding of financial concepts and risks, motivation and
confidence to apply such knowledge and understanding in order to make effective decisions
regarding the range of financial contexts and also to improve the financial well-being of individuals and
society, and to enable participation in the economic life.

https://www.researchgate.net/publication/322375634_Financial_Literacy_of_Professional_and_Pre-
Service_Teachers_in_the_Philippines

The paper investigated the retirement confidence among Domestic and Overseas Filipino Workers in
relation to job commitment. Specifically, the study determined the relationship between clarity of
retirement goal and retirement confidence that refers to the quality of life that could still be maintained
during retirement. For several studies, savings already provided perceived confidence for retirement to
would be retirees but this study would check if the perception still applies. Banks in the Philippines today
offer a savings interest rate of less than 1% (excluding withholding tax) with the current inflation rate
target of 4.3%. The study output could motivate government agencies to review the policy on mandatory
retirement package that direct employers offer their employees for comfortable retirement.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3744784

Local Review

Mandell (2009) defines financial literacy as “the ability to use knowledge and skills to manage one’s
financial resources effectively for lifetime financial security.” Huston (2010) explains that financial
literacy is made up of two elements: understanding and use. Understanding financial literacy implies
that a person is knowledgeable about personal finance, and applies such knowledge in dealing with
one’s finances. Meanwhile, Hastings, et al (2013) refers to financial literacy as: (1) Knowledge of
financial products (e.g., what is a stock vs. a bond; the difference between a fixed vs. an adjustable rate
mortgage); (2) Knowledge of financial concepts (inflation, compounding, diversification, credit scores);
(3) Having the mathematical skills or numeracy necessary for effective financial decision making; and (4)
Being engaged in certain activities such as financial planning.

The Filipino mindset upon receipt of salaries, as commonly-known, is that upon receipt of salaries,
spending comes in before saving. What is left, is saved. If there’s none left, then, there’s nothing saved.
According to a study conducted by Philam Life, 96 percent of Filipinos are concerned about their own and
their family’s health, however, only 16 percent of them are prepared to pay for medical costs in case
they are diagnosed with a critical illness. There is a rising number of senior-dependents or those retirees
who depend on their children for financial help, due to lack of financial education.
https://nro13.neda.gov.ph/financial-literacy-for-filipinos-understanding-for-better-living/

Living a blissful and worry-free life after retirement is an ideal scenario. Based on a recent study, 90% of
Filipinos are worried that it will be a different picture for them—they will have almost nothing in their
pocket, with poor health, and with no one to look after them. Despite this rather unfavorable outlook,
Filipinos are still unprepared for their retirement. According to the 2019 Melbourne Mercer Global
Pension Index, the retirement system in the Philippines is among one of the worst in the world, ranking
34th out of 37 countries.

https://www.prulifeuk.com.ph/en/explore-pulse/health-financial-wellness/dealing-with-retirement-
worries-and-the-filipino-culture/

According to the latest data from Bangko Sentral ng Pilipinas (BSP), only 29% of Filipino adults have
bank deposits in 2019. Though this is already a 6% increase from 2017 data, it’s still one of the lowest
savings rates in Southeast Asia. Manulife Investor Sentiment Index (MISI) survey showed Filipino
investors only have a personal income equivalent to 3.6 months set aside for retirement, the lowest in
Asia (with an average of 2-3 years).

https://www.pna.gov.ph/opinion/pieces/407-what-keeps-filipinos-from-preparing-for-the-future-

Foreign Review

Government employee means any employee of the State, a county, city, town, village, or any other
political subdivision or civil division of the State, or a county, city, town, village. “Government employee”
shall also include any employee of a public authority, commission or public benefit corporation.

https://www.lawinsider.com/dictionary/government-employee

With many of us now expected to live well into our 80s, retirement is becoming a longer and more
meaningful phase of life. Along with life expectancy, the proportion of Australians reaching retirement
age is also growing.

https://lens.monash.edu/@business-economy/2020/08/19/1381089/retirement-confidence-its-more-
than-just-the-money

Retirement confidence is about maintaining good health, setting specific goals and understanding your
finances, say Australians age 50 and over.

https://www.australiansuper.com/retirement/retirement-articles/2020/08/key-factors-to-retiring-with-
confidence

Foreign Studies

“Retirement confidence” can be defined as an individual’s attitude towards retirement and

confidence towards preparation for retirement (Kim, Kwon, & Anderson, 2005). The terms
“retirement confidence”, “retirement planning behaviour”, and “retirement attitude” have been
used interchangeably in past literature (Kim et al., 2005; Moorthy et al., 2012).

Retirement is the stage when an individual permanently leaves the workplace. This means that
the income of retirees will stop immediately upon retirement. However, their expenses will
continue and they will need to continue their lives depending solely on their accumulated savings. As
the main source of retirement income is savings (Russell & Stramoski, 2011), proper planning during
the pre-retirement stage is essential for a secure retirement life. Despite the importance of
retirement planning, only less than 5% of Malaysians are well prepared for their retirement (Habib,
2007). Given the poor retirement planning among Malaysians, it is important to study how
confident Malaysians are of their financial preparedness for their retirement.

https://www.researchgate.net/publication/269668165_The_Influence_of_Financial_Literacy_Saving_Be
haviour_and_Financial_Management_on_Retirement_Confidence_among_Women_Working_in_the_M
alaysian_Public_Sector#fullTextFileContent

This study applied Pearson Correlational analysis to determine the relationship between the variables.
The findings reveal that retirement confidence is positively correlated with financial literacy, saving
behaviour, and financial management. Furthermore, multiple regression analysis was applied to
determine the predictors of retirement confidence. This study concludes that financial literacy, saving
behaviour, financial management, and financial status are significant predictors of retirement
confidence among working women, with financial management as the major factor contributing
towards retirement confidence. The findings of this study have practical implications for financial
advisors in helping working women to be more aware of their future retirement life financial needs and
to prevent financial crisis in later years.

https://www.researchgate.net/publication/269668165_The_Influence_of_Financial_Literacy_Saving_Be
haviour_and_Financial_Management_on_Retirement_Confidence_among_Women_Working_in_the_M
alaysian_Public_Sector#fullTextFileContent

The results suggest that those who calculated their retirement fund needs, had more savings, higher
levels of confidence in government programs such as Social Security and Medicare, higher household
income, better health, and who received workplace financial education and advice had higher levels of
retirement confidence than others. The findings provide implications for financial professionals,
employers, and policymakers. (PsycINFO Database Record (c) 2017 APA, all rights reserved)

https://psycnet.apa.org/record/2006-11386-006

Individuals are increasingly put in charge of their financial security after retirement. Moreover, the
supply of complex financial products has increased considerably over the years. However, we still have
little or no information about whether individuals have the financial knowledge and skills to navigate this
new financial environment. To better understand financial literacy and its relation to financial decision-
making, we have devised two special modules for the DNB Household Survey. We have designed
questions to measure numeracy and basic knowledge related to the working of inflation and interest
rates, as well as questions to measure more advanced financial knowledge related to financial market
instruments (stocks, bonds, and mutual funds). We evaluate the importance of financial literacy by
studying its relation to the stock market: Are more financially knowledgeable individuals more likely to
hold stocks? To assess the direction of causality, we make use of questions measuring financial
knowledge before investing in the stock market. We find that, while the understanding of basic economic
concepts related to inflation and interest rate compounding is far from perfect, it outperforms the
limited knowledge of stocks and bonds, the concept of risk diversification, and the working of financial
markets. We also find that the measurement of financial literacy is very sensitive to the wording of
survey questions. This provides additional evidence for limited financial knowledge. Finally, we report
evidence of an independent effect of financial literacy on stock market participation: Those who have
low financial literacy are significantly less likely to invest in stocks.

https://www.nber.org/system/files/working_papers/w13565/w13565.pdf

Some factors have significant relationship with individual’s preparedness and capability for retirement
saving (Joo & Grable, 2005). These factors can be classified into three Pdf_Folio:245 groups:
environmental influences, individual differences, Journal of Financial Counseling and Planning, Volume
30, Number 2, 2019 245 and psychological process factors (Engel, Blackwell, & Miniard, 1990). Parents
have vital roles in instructing their children for having appropriate behavior in all aspects of life including
financial management. The results by Ward, Wackman, and Wartella (1977) revealed that by
prescriptive and proscriptive financial advice, children’s attitudes toward saving could be developed.
They pointed out that if saving was important for parents, their children could adopt this behavior and
have it become meaningful for them. Self-control is an indisputably important factor in regards to saving
outcomes (Kennickell, Starr-McCluer, & Sunden, 1997). No matter how much importance individuals
attach to saving, if they have difficulties withstanding short-term temptation and do not find ways to
constrain their consumption behavior, they will not be able to save (Van Rooij et al., 2011).

https://files.eric.ed.gov/fulltext/EJ1241039.pdf