Abrian Joy B. Orencia
New Era University
How to Cite:
Orencia, A. J. B. (2019). Exploratory analysis of retirement preparedness among working professionals in thrift banks. NEU Knowledge Journal: A Compilation of Researches of New Era University Faculty, Staff, Students, and Administrators, 1(1), 13–24. https://doi.org/10.64303/neu-urc-knowledge-2019-ExAnRePrAm
Abstract
This study examined the retirement preparedness of working professionals employed in thrift banks within the National Capital Region. Using a descriptive-correlational research design, data were collected from 259 respondents through a structured questionnaire. The instrument assessed three key dimensions of financial planning for retirement (FPR): capability, willingness, and perceived opportunities. Results showed that most respondents were young professionals aged 23–38, college graduates, and full-time employees with no financial dependents. The average capability score was 4.20, interpreted as moderately capable, while the average willingness score was slightly higher at 4.28, indicating a moderately willing attitude toward retirement planning. A significant positive relationship was found between capability and willingness (Pearson’s r = .755, p < .01). Despite these attitudes, many respondents were not actively engaged in available savings or investment opportunities. The findings highlight the need for enhanced financial education and programs that encourage early and effective retirement planning, especially among young professionals.
Keywords: retirement preparedness, financial planning, capability, willingness, working professionals, thrift banks
Introduction
Children in the Philippines are expected to care for their elderly parents during retirement, but some Filipinos are now deviating from this norm. When they are no longer working, some retired Filipinos look to their personal savings, pensions, and estate to provide the necessary funds. For a young investor, the numbers surrounding retirement can be quite intimidating. If the investor retires at the age of 65 and expects to die at the age of 85, he or she will require 20 years of income. This study will explore the preparedness of working professionals towards their retirement.
The “Capacity-Willingness-Opportunity Model” was proposed by Hershey, Jacobs-Lawson, and Austin in 2013 in order to comprehend Financial Planning for Retirement (FPR). In this model, the authors conceptualized financial planning in three primary concepts: capacity, willingness and opportunity. Capacity refers to individual’s cognitive and knowledgebased resources that enable effective financial planning for retirement. Willingness refers to a person’s motivation, attitudes, and psychological readiness to engage in retirement planning. Opportunity refers to the external, environmental, and contextual factors that facilitate or hinder an individual’s ability to plan for retirement. In this particular study, however, the term capability is adapted in place of capacity to more accurately reflect the respondents’ financial knowledge, skills, and competencies relevant to retirement planning. This modification emphasizes the practical and skill-based aspects of financial preparedness rather than the theoretical or potential aspects implied by the term capacity. Therefore, this exploratory study aims to examine how capability, willingness, and opportunity relate to the retirement preparedness of working professionals employed in thrift banks.
Research Questions
1. To what extent are the respondents able to plan and save for retirement?
2. How willing are the respondents to plan and save for retirement?
3. What opportunities do respondents have to plan for their retirement?
4. Is there a significant correlation between the capability and willingness of respondents to plan and save for retirement?
Hypotheses
Ho: There is no significant correlation between the capability and willingness to plan for retirement (ρ = 0)
Ha: There is a significant correlation between capability and willingness to plan for retirement. (ρ ≠ 0)
Methodology
Research Design
This study employed descriptive statistics and Perason’s r correlation to examine the relationship between the respondents’ retirement-related capability and willingness. A cross-sectional survey design was utilized to assess the respondents’ levels of capability, willingness, and opportunity in relation to FPR.
Sample Size
Sample size was calculated using G*Power application to determine the appropriate size from the target population who are working professionals deployed in thrift banks in National Capital Region. The researcher used the following specifications: Correlation Bivariate Normal with effect size = 0.15, alpha = 0.05, power = 0.80, which yielded a required sample size of 259.
Survey Questionnaire and Distribution
The questionnaire consisted of four sections: (1) demographic profile, (2) capacity to plan and save for retirement, (3) willingness to plan and save for retirement, and (4) opportunities to do so. The capacity and willingness sections each contained five items per subcategory or indicator to assess FPR. Each item was rated using a summative 5-point Likert scale with tailored response labels for each component:
Capability (Knowledge, Skills, Financial Intelligence): 5 – Highly Capable, 4 – Moderately Capable, 3 – Neutral, 2 – Slightly Incapable, 1 – Not Capable. Willingness (Goal Clarity, Fear and Anxiety, and Social Norms): 5 – Very Willing, 4 – Willing, 3 – Neutral, 2 – Unwilling, 1 – Very Unwilling.
As part of the Opportunity section, respondents were asked about the investment options they currently possess for FPR, such as stocks, time deposits, bonds, mutual funds, and savings specifically allocated for retirement.
Participants
The majority of the respondents hold a college degree (86.5%), while the remaining 13.5% have completed graduate studies. A large proportion of the respondents (87.17%) fall within the age range of 23 to 38 years. This suggests that most participants are young professionals who are in a favorable stage for early retirement planning. In terms of marital status, nearly 60% are single. Regarding monthly gross income, 81% earn between ₱20,000 and ₱40,000. Most respondents (63.3%) are employed full-time and have no other sources of income, as presented in Figure 1. Additionally, a significant portion (160 respondents or 61.8%) reported having no dependents. These findings suggest that a majority of the respondents have fewer financial responsibilities, which may allow them to have more surplus funds—resources that can be strategically allocated toward achieving their full economic potential and preparing for retirement.
Instrument Validation
Reliability for each domain in Part 1 and Part 2 of the survey questionnaire was computed where all values of Cronbach’s alpha (Knowledge = .945, Skills = 947, Financial Intelligence = .955, Clarity of Financial Goals = .959, Fear and Anxiety = .937, and Social Norms =.921) are all greater than the 0.70 recommended minimum acceptable value for responses to be considered reliable or consistent (Bohrnstedt and Knoke, 1988).
For the purpose of validating the instrument, five research experts were consulted to evaluate the survey questionnaire’s content. Based on the results of the inter-rater validity, the survey questionnaire was determined to be valid and operational. The raters deemed all thirty (30) items or questions to be highly adequate.
Data Collection Procedure
The survey was administered over the course of three business days with the participation of Working Professionals from thrift banks in the National Capital Region. The collected data were then tabulated, and analyzed.
Data Analysis
The first, second, and third research questions were analyzed using descriptive statistics such as frequency, percentage, and mean while the fourth problem statement was resolved using Pearson’s r correlation.
Results and Discussion
Research Question 1
In terms of capability, respondents were moderately capable across all three indicators: knowledge (M = 4.28), skills (M = 4.10), and financial intelligence (M = 4.22), with an average capability score of 4.20, indicating a general moderate level of capability (Table 1). Knowledge refers to the respondents’ awareness in FPR, as well as the different financial instruments and financial issues about retirement. Skills involve the actual practices of saving for retirement while financial intelligence refers to the understanding of time value of money and proper budgeting.
Research Question 2
Similarly, the respondents demonstrated moderate willingness to engage in FPR-related behaviors. They showed moderate willingness in clarity of goals (M = 4.25), management of fear and anxiety (M = 4.12), and adherence to social norms (M = 4.23). The average willingness score was 4.28, suggesting that respondents were generally moderately willing to participate in retirement planning and related financial activities. Clarity of goals refers to giving priority to retirement plans. Management of fear and anxiety denotes being open to risks in investing funds for retirement and adherence to social norms refers to readiness to enhance investment decisions due to peer influence or societal expectations.
Research Question 3
Most respondents reported having no investments across all categories. However, a notable proportion indicated holding time deposits (25.10%) and insurance policies (35.91%), which may be attributed to the affordability and low-risk nature of these investment options.
The findings suggest that, despite the availability of various financial instruments, many working professionals are not actively engaged in investment vehicles. This may indicate a need for increased motivation and awareness of the different opportunities available for retirement preparation.
Research Question 4
As shown in Table 2, there was a significant, positive correlation between capability and willingness to plan and save for retirement, r = .755, p < .001. This indicates that as respondents’ capability increases, their willingness to engage in retirement planning also tends to increase.
Limitations and Future Research
One limitation of this study is that it did not examine the statistical relationship between opportunities and the respondents’ capacity and willingness to plan and save for retirement. Although these constructs were measured independently, the study did not explore whether capability or willingness influences the utilization of available opportunities. Furthermore, it did not address the optimal age to begin financial planning for retirement (FPR) or the ideal duration needed to achieve financial independence. Future research may explore these areas to provide a more comprehensive understanding of retirement preparedness. Future researchers may also build upon this study to reassess the retirement preparedness of working professionals in the context of evolving financial trends. Updated findings can inform recommendations for more relevant financial services and strategies in line with the innovations of the modern world.
References
Hershey, D. A., Jacobs-Lawson, J. M., & Austin, J. T. (2013). Effective financial planning for retirement. In M. Wang (Ed.), The Oxford handbook of retirement (pp. 402–430). Oxford University Press.
Hershey, D. A., & Jacobs-Lawson, J. M. (2007).Goal clarity and financial planning activities as determinants of retirement savings contributions. International Journal of Aging and Human Development, 64(1), 13–32. https://doi.org/10.2190/13GK-5H72-H324-16P2
Bohrnstedt, G. W., & Knoke, D. (1988). Statistics for social data analysis (2nd ed.). F. E. Peacock Publishers.
