Psychological Predictors of Retirement Saving Behavior: An Empirical Analysis of Muslims Staff in Melaka

Abstract

Planning is one from the most important elements in Islam. In addition, good wealth management is well encouraged in Islam and it cannot be achieved without proper planning and action. Therefore, retirement planning as a degree for future wealth protection, should being a part of top priority in financial planning. However according to Manulife Investor Sentiment Index 2013, less than half of Malaysians have started planning for their retirement, while fewer than one in five consider such planning as their first or second financial priority. The result from that survey was contradicted from what should be practiced by Muslims. Therefore, this study investigates the psychological predictors of retirement saving behavior (RSB) among Muslims staff in Melaka. The questionnaire was designed into two sections; demographic and psychological predictors of retirement saving behavior. The results identified goal clarity and social interaction influence RSB, while self control did not has significant influence on RSB. Goal clarity was found to be the most influence predictor, as having goal clarity in specific areas will lead individual with powerful focus and a mission to drives towards results. The findings from this study give benefit to policy maker as well as to Malaysian wealth advisor. Besides, this research gives significant implications for working individuals to do early planning for their retirement.

Keywords: Retirement Planning; Wealth Management; Saving Behavior; Muslims; Psychological Predictors

JEL Classification: A00, D1