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Article
Publication date: 30 April 2021

Linh Thi My Nguyen, Phong Thanh Nguyen, Quynh Nguyen Nhu Tran and Thi Tuong Giang Trinh

The purpose of this study is to examine a mechanism through which subjective financial literacy can exert negative effects on the retirement saving intention and…

Abstract

Purpose

The purpose of this study is to examine a mechanism through which subjective financial literacy can exert negative effects on the retirement saving intention and behaviors, which has not been well understood in prior research. Particularly, the authors draw on the relevant risk literature to introduce financial risk tolerance and risk perception as important mediators that transfer subjective financial literacy into reduced retirement saving intention which in turn affects the saving behaviors.

Design/methodology/approach

The authors test the model with a sample of 347 adults using factor analysis and structural equation modeling.

Findings

Consistent with the notions about the negative side of subjective financial literacy, the authors find supporting evidence for the proposed indirect effects of financial literacy on retirement saving intention via risk tolerance and risk perception. In addition, the authors observe that an individual's retirement saving intention strongly predicts their retirement saving behaviors.

Originality/value

The study offers insights into the mechanisms that subjective financial knowledge might also inhibit individual's responsible financial behaviors (e.g. retirement saving).

Details

Review of Behavioral Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1940-5979

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Article
Publication date: 27 February 2007

Howard Flight

This paper seeks to evaluate the Pensions White Paper proposals against down to earth and relatively obvious objectives and criteria; and to suggest some options – no…

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479

Abstract

Purpose

This paper seeks to evaluate the Pensions White Paper proposals against down to earth and relatively obvious objectives and criteria; and to suggest some options – no matter how politically difficult – which need to be considered.

Design/methodology/approach

The paper assesses eight objectives which the White Paper should meet, namely: increasing retirement saving and reducing the savings gap; adequate minimum income for all aged over 75; incentives for retirement saving; simpler retirement saving products; tidying up state saving schemes; public sector and private pension provisioning; retirement saving products and arrangements for changing times; and stability for the future.

Findings

The White Paper has the hallmarks of a compromise and politically crafted palliative, which is in danger of having unintended and contrarian effects towards reducing rather than increasing pension savings.

Originality/value

The paper offers a critical appraisal of the Pensions White Paper proposals.

Details

Journal of Financial Regulation and Compliance, vol. 15 no. 1
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 4 September 2020

Sara Osama Alkhawaja and Mohamed Albaity

This study aims to examine the effect of future time perspective (FTP), financial risk tolerance (FRT) and knowledge of financial planning for retirement (KFPR) on…

Abstract

Purpose

This study aims to examine the effect of future time perspective (FTP), financial risk tolerance (FRT) and knowledge of financial planning for retirement (KFPR) on retirement saving behavior (RSB).

Design/methodology/approach

Primary data were collected using a non-probability judgmental sampling technique. A questionnaire was distributed either manually (by hand) or through email where 370 United Arab Emirates (UAE) residents used in the higher education sector participated. The data analysis was obtained by using SPSS and Smart-PLS software. Structural equation modeling was used to evaluate the linear relationship between FTP, FRT, KFPR and RSB.

Findings

The findings from this study are consistent with previous research. FTP and KFPR had a significant positive effect, while FRT had an insignificant negative effect on RSB.

Research limitations/implications

This study examined the effect of a few psychological variables on RSB and was conducted on a sample of university employees in the UAE. Additional research should examine environmental influences, individual differences and other psychological process factors. Furthermore, future research could extend the current study into other industries and other the Middle East and North Africa countries.

Practical implications

A better understanding of the factors that influence RSB can help working individuals, financial advisors/financial planning professionals, financial institutions and government/policymakers strengthen their understanding and initiatives toward retirement planning.

Originality/value

To the best of the authors knowledge, none of the previous research papers studied RSB in the UAE. Additionally, it is important to note that the results of this study can be generalized to all Gulf Cooperation Council countries because of the similar economic, political, ethical, social and cultural factors.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

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Article
Publication date: 5 March 2018

Roberta Adami, Andrea Carosi and Anita Sharma

This paper aims to study long-term savings accumulation in the UK. The authors use cross-sectional information from the extensive data set of the Family Resources Survey…

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584

Abstract

Purpose

This paper aims to study long-term savings accumulation in the UK. The authors use cross-sectional information from the extensive data set of the Family Resources Survey to compare long-term saving amongst different ethnic groups with the control group, the native population. The paper reflects on whether different groups are more likely to suffer poverty in retirement.

Design/methodology/approach

In this analysis, the authors apply the life-cycle framework to explain saving profiles. This theoretical model has been used extensively in the field of economics and can be applied to empirical studies to examine changes in income and saving patterns over the life-course. The framework contends that individuals make savings decisions to smooth consumption over different phases of their life-cycle.

Findings

The findings indicate that socio-economic factors are key elements in determining whether individuals plan for retirement if factors are controlled for the differences in saving behaviours between ethnic minorities and the control population decrease considerably. Asian women, with good education and social standing, display greater saving rates than the control group, while the socio-economic disadvantage suffered especially by Pakistani and Bangladeshi women is key to their inability to save long-term. High levels of poverty in retirement are more likely to be caused by the interaction of low levels of education, part-time work and long spells of unemployment than by ethnicity.

Originality/value

The important contribution to the debate on savings by ethnic minorities is the extension of the life-cycle model to specific sections of the population and to proffer new insights into their saving/dis-saving patterns and ultimately their welfare in retirement.

Details

Studies in Economics and Finance, vol. 35 no. 1
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 20 May 2019

Lucía Rey-Ares, Sara Fernández-López, María Milagros Vivel-Búa and Rubén Lado-Sestayo

This paper aims to investigate whether individuals’ planning horizon influences their decision to save privately for their retirement.

Abstract

Purpose

This paper aims to investigate whether individuals’ planning horizon influences their decision to save privately for their retirement.

Design/methodology/approach

Focussing on Spain, this empirical research uses the fifth wave of the Survey of Health, Ageing and Retirement in Europe (SHARE)[1]. Logit models are estimated considering variables related to demographic characteristics, economic situation, education and cognitive abilities and psychological and social factors.

Findings

The results confirm that the planning horizon significantly influences the decision to save for retirement. Long-term planners are more likely to save for retirement than short-term planners.

Originality/value

Although previous literature has identified the planning horizon as a relevant variable in the decision to save for retirement, few empirical studies have evaluated their impact. This paper shows that it is important to develop habits of financial planning in societies, especially in societies with a prominent orientation towards the present.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 13 November 2017

Cecilia Hermansson

The purpose of this paper is to understand if and how saving motives can predict bank customers’ use of financial advisory services. In addition, it analyzes possible…

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1143

Abstract

Purpose

The purpose of this paper is to understand if and how saving motives can predict bank customers’ use of financial advisory services. In addition, it analyzes possible gender differences regarding this relationship.

Design/methodology/approach

The study uses a large and unique sample of Swedish bank customers, combining objective bank register data with subjective data from a questionnaire. A probit regression is used. Since decisions regarding the use of financial advisory services can be influenced by, e.g., age, wealth, gender and marital status, the author analyzes results at both the overall level and the group level.

Findings

All three saving motives are found to be predictors, i.e., motives to save for wealth, retirement, and a rainy day (with opposite sign). Only the motive to save for retirement is significant for both women and men. Wealth differences seem more important than gender differences, except for the rainy day motive where gender differences are observed also among the wealthy.

Practical implications

The study is important since there is a need for financial advisors to understand their customers’ context, including motives to save. Saving motives involving longer time horizons and more uncertainty are likely to predict the use of financial advisory services.

Originality/value

This paper is original because it deepens the understanding of the relationship between saving motives and customers’ use of financial advisory services, focusing also on the aspect of gender differences, while controlling for demographics and socioeconomics, and customers’ interest and confidence in financial matters, risk tolerance, and financial literacy.

Details

Managerial Finance, vol. 43 no. 11
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 12 April 2019

Milagros Vivel-Búa, Lucía Rey-Ares, Rubén Lado-Sestayo and Sara Fernández-López

The purpose of this paper is to study the driving forces of both the decision to participate in individual pension plans and the amount of money allocated to such plans…

Abstract

Purpose

The purpose of this paper is to study the driving forces of both the decision to participate in individual pension plans and the amount of money allocated to such plans. Moreover, this paper evaluates the potential role that income plays, which has not previously been considered in depth in the financial literature.

Design/methodology/approach

Based on a sample of the Spanish population over the period 2008–2015, this paper estimates probit and tobit models, using 165,791 observations. The driving forces of private retirement savings comprise demographic, financial and socio-economic characteristics.

Findings

This paper confirms the impact of socio-demographic and economic variables on participation and monetary contributions to pension plans. It also confirms that income plays a non-negligible role. Moreover, empirical evidence reveals that the effect of gender is related to the income stratum to which the individual belongs.

Originality/value

Retirement planning plays a key role in retirees’ future income and several countries have emphasised the importance of private individual savings to supplement the minimum provided by public pension schemes. The previous literature has concluded that those who plan their retirement end their working lives with three times the wealth of non-planners. Consequently, analysis of whether people are saving enough for their retirement can contribute to avoiding future wealth inequalities among retirees. Spain is one of the countries with the greatest inequality in income distribution, so this issue is of even greater interest.

Details

International Journal of Bank Marketing, vol. 37 no. 6
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 22 May 2009

Catherine Rickwood and Lesley White

This purpose of this paper is to respond to calls for further research into consumer pre‐purchase decision‐making, and investigate the factors that cause a customer to…

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5852

Abstract

Purpose

This purpose of this paper is to respond to calls for further research into consumer pre‐purchase decision‐making, and investigate the factors that cause a customer to make a decision to save for retirement.

Design/methodology/approach

Exploratory research using eight focus groups was undertaken in Sydney, Australia with a total of 55 participants. The data were analysed using the approach suggested by Cresswell and includes coding into chunks, development of themes, interpreting, and validating findings.

Findings

Three key findings emerged from the research. First, there are certain internal, external, and risk factors that have a major impact on propensity to save for retirement. These are: involvement level, motivation, needs and wants, family influence, marketer influence, competitive options, financial risk, functional risk, and psychological risk. Second, no clear and universal gender differences in the pre‐purchase decision‐making process emerged during the focus group discussions. Finally, alternative options for spending and addressing risk negatively influence pre‐purchase decision‐making and therefore the desire or ability to save.

Research limitations/implications

This study is constrained by its exploratory nature. Consequently, future research could utilise quantitative methodology to confirm findings and allow generalisation of results. Also, a study incorporating ethnicity would add breadth to the findings.

Practical implications

Managers and policy makers benefit from understanding that marriage and turning 40 years old are highly influential to a consumer's likelihood to save for their retirement. This information is particularly useful for the development of marketing and communication campaigns.

Originality/value

This is the first exploratory study of pre‐purchase decision‐making which researches the triggers for buying complex financial services associated with saving for retirement.

Details

Journal of Services Marketing, vol. 23 no. 3
Type: Research Article
ISSN: 0887-6045

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Article
Publication date: 2 August 2011

James Obben and Monique Waayer

The combination of low rates of private saving and projected increases in the fiscal burden of financing a public pension scheme for an ageing population poses a major…

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1664

Abstract

Purpose

The combination of low rates of private saving and projected increases in the fiscal burden of financing a public pension scheme for an ageing population poses a major policy challenge in New Zealand. Policy discourses espouse pension reform and the redoubling of household saving efforts. However, some of the policy options could have offsetting effects. To inform the debate with research findings, the purpose of this paper is to revisit the relationship between social security and household saving.

Design/methodology/approach

The paper employs a constructed social security wealth (SSW) variable in a hybrid life cycle‐permanent income consumption/saving model pioneered by Feldstein. Time series techniques are used.

Findings

The results show that an increase in the constructed gross SSW variable boosts saving. This suggests that concerns with accumulating assets to match the length of the implicit life expectancy at the current pension eligibility age overwhelm the view that the pension benefit is an adequate substitute for household assets. The other findings are consistent with a priori expectations: increases in disposable income boost saving; there is a significant propensity to consume out of household net wealth; and inflation and unemployment engender significant precautionary saving.

Practical implications

A policy to raise the retirement age may reduce the gross SSW and therefore the fiscal burden of the public pension scheme. However, in shortening the expected post‐retirement period that households have to save for, the policy may also reduce the saving rate.

Originality/value

Although the Feldstein approach has been used in studies in countries like Australia, Canada and the USA, a comparable study has not been undertaken in New Zealand. This study seeks to fill that void.

Details

International Journal of Social Economics, vol. 38 no. 9
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 4 September 2009

Orla Gough and Rod Hick

The purpose of this paper is to examine issues relating to public and private pensions for individuals from some of the major ethnic minority groups in the UK.

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1874

Abstract

Purpose

The purpose of this paper is to examine issues relating to public and private pensions for individuals from some of the major ethnic minority groups in the UK.

Design/methodology/approach

The paper draws on data from in‐depth interviews and focus groups with 64 respondents from the six largest ethnic minority groups in the UK, as well as from a white British control group.

Findings

The research found that a belief in the need for retirement planning was held by respondents of all backgrounds, that there was a widespread view that state pension should be increased to a more adequate level, and concern amongst some respondents that they would be unable to receive retirement income from pension schemes if they were to retire in another country.

Research limitations/implications

The limitations of the research largely concern the limited sample of respondents (n = 64), the use of English in all interviews and significant reliance on the internet in order to contact potential respondents.

Practical implications

It is suggested that more widespread information about retirement planning is needed in minority ethnic media and that in promoting the forthcoming scheme of Personal Accounts, the government should make clear the extent to which the scheme will allow members to receive retirement income in another country, for those who choose to retire abroad.

Originality/value

The paper contributes new information about attitudes to the forthcoming scheme of Personal Accounts, and explores retirement strategies of ethnic minority individuals in the UK.

Details

International Journal of Sociology and Social Policy, vol. 29 no. 9/10
Type: Research Article
ISSN: 0144-333X

Keywords

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