Factors contributing to financial preparedness for retirement among manufacturing industry employees in Blantyre, Malawi

Abstract

Financial preparedness for retirement has garnered significant attention in an era marked by increasing life expectancies and shifting economic landscapes. Retirement, once viewed as a period of leisure and relaxation, now necessitates careful financial planning to ensure a secure and comfortable lifestyle in later years. With the decline of traditional pension systems and the rise of self-directed retirement accounts, more employees leave the workplace without properly preparing financially for their retirement (Muhome, 2023). Against this backdrop, this thesis sought to investigate why Malawi employees do not have enough savings for retirement by looking at contributing factors, which are financial literacy, attitude toward retirement, demographic characteristics, and cultural and societal influences in relation to financial retirement preparedness for employees in the manufacturing industry in Blantyre, Malawi. The study used a quantitative cross-sectional causal research design, collecting data from 458 participants in the selected manufacturing firms in Chirimba and Makata industrial areas. The data was analyzed using descriptive and inferential statistics, including regression and correlation analyses. The study discovered a moderate positive significant relationship between financial preparedness for retirement and financial literacy (r = 0.629, p = <0.001), cultural and social influence (r= .51; p<.001) and attitude toward retirement (r = 47; p = < .001) among respondents respectively. Additionally, the study found that there are differences among the different age groups (χ2(4) = 3.49, p = 0.480) and gender (χ2(1) = 2.78, p = 0.095) when it comes to financial retirement preparation. The study also discovered that financial literacy (39.6%), attitude toward retirement (22.3%), and cultural and social influences (26.3%) significantly predict financial preparedness for retirement (p = < .001). These predictors when combined, account for 46% (p = < .001) of financial preparedness for retirement among employees. Lastly, using attitude toward retirement as a mediator showed significant mediating effects on direct and indirect relationships between financial literacy (p<.001), cultural and social influences (p<.001) respectively and financial preparedness for retirement. Overall, the study provides valuable insights into the factors that contribute to financial preparedness for retirement among employees in the manufacturing industry in Blantyre, Malawi. The study’s findings can inform targeted interventions and policies to enhance employees’ financial preparedness for retirement in the sector.