Self-Efficacy Perspective on Retirement Preparedness

Abstract

The literature on retirement has identified various factors that affect one’s retirement planning and satisfaction, including psychological characteristics, social forces, and demographic variables. While there are many studies of demographic and social factors that affect retirement planning, there has been far less attention to the role of psychological factors. Of particular interest is self-efficacy, which refers to a person’s perceived influence on their choice of goals and the efforts they put forth to accomplish those goals. This study aims to calculate the level of task-specific self-efficacy related to retirement, also known as retirement self-efficacy, that an employee possesses. It also examines the power of retirement self-efficacy in predicting a person’s financial preparedness for retirement, based on a survey among employees (N = 457) followed by statistical analysis. The study found that retirement self-efficacy can be used to predict the level of financial preparedness for retirement. The results of the analysis showed that 85.2% of the total variation in financial preparedness for retirement can be predicted by retirement self-efficacy.

TOPICS: Long-term/retirement investing, wealth management, retirement

Key Findings

• ▪ Retirement self-efficacy can be used to predict the level of financial preparedness for retirement.

• ▪ 85.2% of the total variation in Financial preparedness for retirement, can be explained by Retirement self-efficacy.