Financial Literacy and Retirement Planning Among Employees of a Higher Educational Institution in the Philippines
page 42-61
Anna Maria Mendoza
Doctor of Business Administration
University of the Philippines
Dean, School of Management, University of Asia and the Pacific
Nogin Bunda
Master of Science in Management
University of Asia and the Pacific
Faculty and Program Coordinator, Master of Science in Management (MScM), University of Asia and the Pacific
Kyra Audrey Pulohanan
Master of Science in Management
University of Asia and the Pacific
Faculty, University of Asia and the Pacific
Sofia Flor
Bachelor of Science in Accountancy
University of Asia and the Pacific
Andrea Pamela Ong
Bachelor of Science in Accountancy
University of Asia and the Pacific
Melanie Rose Tan
Bachelor of Science in Accountancy
University of Asia and the Pacific
Keywords: Financial Literacy, Retirement Planning, Inflation, Interest, Risk, Diversification
ABSTRACT
The study sought to determine the level of financial literacy of a higher educational institution’s employees and their level of retirement planning as well as the effect of the employees’ level of financial literacy on their retirement planning. The measures used for financial literacy and retirement planning were patterned after the 2011 study by Lusardi and Mitchell, 2015 study by Boisclair, Lusardi, and Michaud, 2016 study by Moure and 2017 study by Kalmi and Ruuskanen i.e., knowledge of inflation, simple interest, and compound interest.
Frequency distribution was used to determine the demographic profile distribution. Independent T-tests and One-way Analysis of Variance (ANOVA) were used to determine significant differences among the major variables in relation to the different groups of the demographic profile of respondents. On the other hand, binary logistic regression was used to create models that were used to determine the effects of financial literacy on the respondents’ aspects of retirement planning.
The results showed that the employees of the higher educational institution (HEI) have a high level of financial literacy. 61.40% of the employees have a plan for retirement while 64.10% have a separate plan for retirement savings aside from the mandatory contributions. However, for various reasons, only 13.40% were able to stick to this separate plan.
Financial literacy has a negative significant effect on retirement planning. Respondents are less likely to have a retirement plan considering their educational attainment. Those who are graduates of a doctorate degree are less likely to have a retirement plan. The demographic factors have no effect on the level of financial literacy of the respondents. In terms of retirement planning, the respondents with the following characteristics have higher likelihood of doing retirement planning: females (52.8%); within the age group of 30 to 41 (22.5%); college graduates (31.70%); married (31.70%); belonging in a household with 3 to 5 persons (32.39%); and are earning between P20,000 to P70,000 per month (46.5%). The research will help the university design interventions to address the financial education and retirement needs of its employees.
