ABSTRACT:

As soon as the individual starts earning he should start saving for retirement as it is never too early to start saving for retirement. Retirement savings or creating retirement corpus is not a short term process, but a time consuming long term process. Age of an employee will determine the number of years left to get retired formally by laws. This will help in judging the number as well as the amount of monthly salary to be drawn by the employee from which they can save for retirement. Wise should start saving as early as possible. Many banks and financial institution offer various retirement products and motivates the employees to save for the same but still the initiatives taken by most of the people to activate in this area is negligible. In order to understand about their failure to save for retirement and the reason behind it, the present study tries to find out age as one of the differential factor that influence retirement planning and saving behavior of the employees in Gujarat. The objective of this study was to find out the relationship between age and the retirement saving behavior of private sector employees in Gujarat region. The researcher has used Descriptive and non-experimental type of research design by surveying the sample of private sector employees with the age group from 25 to 60 years from the four different regions of Gujarat like Surat, Navsari, Ahemdabad, Gandhinagar, Rajkot, Jamnagar, Mehsana, Palanpur etc. through Questionnaire method. The researcher found that Young baby boomers are well aware about the pre-requisite need to start early for retirement. Efforts should be made to target those age group who are not aware about the importance of retirement saving.This study would be helpful to the financial advisor who can make personalized assessments and take a step further by studying the one- to-one interventions and can attempt to develop "age-appropriate" degree of risk tolerance among investors.

 

 

 

INTRODUCTION:

“Money is something you got to make in case you don’t die”                                                                 Max Asnas

The young employees were supposed to have knowledge about the benefits of savings and pension schemes as they are the future beneficiaries of pension schemes.

 

Requirement or importance of early retirement planning:

As soon as the individual starts earning he should start saving for retirement as it is never too early to start saving for retirement. Retirement savings or creating retirement corpus is not a short term process, but a time consuming long term process. It takes years or even the whole life to gather the expected retirement goals. As early as the individual starts saving their money will be more rotated and will earn more return as the money will be compounded more number of times for the retiree. Age of an employee will determine the number of years left to get retired formally by laws. This will help in judging the number as well as the amount of monthly salary to be drawn by the employee from which they can save for retirement. Wise should start saving as early as possible. A variety of demographic factors come into play when accounting for a family’s assets, savings, and employer-sponsored retirement plan participation like Education Levels, Income Levels, Gender, Age, Employment Status and Firm Size.

 

LITERATURE REVIEW:

One of the major issue faced by most of the employees were when to start planning for retirement or when to start saving or investment for retirement. In Australia Humpel, O'Loughlin, Wells and Kendig (2009) was worried about the management of retirement funds made by the baby boomers of Australia. Much of concern should be given to selection of perfect age for retirement and the route to reach till there. As early as the employee start the investment, the more benefit would be reaped by them. Ann Carrns (2010) revealed the same logic of early savings. He advised to take into consideration the inflation apart from other economic issues in country. Thus much emphasis was made on economic factor and that too inflation as a major factor effecting retirement income. Those who had saved early for retirement felt safer and secure as compared to those who had saved late or totally not saved. Financial education should be imparted to children well in advance explaining the importance of saving for retirement. Finally it was concluded that saving for retirement is like a golden eggs which gave more returns in future. One of the research postulated from the quantitative analysis that age had an important moderating impact on the way employees see four traditional retirement factors i.e. intrinsic, health, financial and organizational policies and practices. Shacklock and Brunetto has selected the employees with the age above 45 of certain department having skillful and professional skills for survey. Thus the research aimed to examine that whether age moderated employees’ perceptions of retirement factors in deciding about retirement. Earlier literature revealed the criteria adopted for choosing financial services and the types of financial services selected according to age and the phases of an individual’s life cycle. One of the studies in US by Hira, Rock and Caezilia (2009) attempted to investigate under the title “Determinants of retirement planning behavior and differences by age” the determinant of age that affects the retirement planning behavior of the individual. Some of the demographic problems in investigating the influence of Age on retirement savings behavior of individuals in UK were discussed in one of the study made by Demery and Duck (2005) in his paper titled “Savings: Age Profiles in the UK”. Both of them used UK Family Expenditure Surveys to analyze the relationship between savings and age structure. The chief findings of the study were that household savings rates were quite more as compared to the savings of young adults. The study also reported that individual saving rates followed more closely the 'hump shape' of the life-cycle model, although the savings rates of the elderly remained positive for some ages.

 

RESEARCH METHODOLOGY:

Statement of problem:

Many banks and financial institution offer various retirement products and motivates the employees to save for the same but still the initiatives taken by most of the people to activate in this area is negligible. Most of them think that government as well as employer will look after this issue of their golden year’s expenses. But they are not aware about the amount of money required during their retirement which is quite more than what is saved by their government and company. Lack of enough saving among most of the Indian employees makes us think about their financial liquidity during their retirement. In order to understand about their failure to save for retirement and the reason behind it, the present study tries to find out age as one of the differential factor that influence retirement planning and saving behavior of the employees in Gujarat.

 

Objective of the study:

The objective of this study was to find out the relationship between age and the retirement saving behavior of the private sector employees in Gujarat Region.

 

Hypothesis of the study:

H0: There is no association between age and retirement saving behavior of private sector employees.

H1: There is some association between age and retirement saving behavior of private sector employees.

 

Research Design:

The present study is ‘Descriptive and Non-experimental’ in nature. Also the study can also be described as Single Cross-Sectional Research Design.

 

Sampling Design:

Sampling design is one of the important parts of any research study.

 

Sampling Frame:

The study has the population base in Ahmedabad, Mehsana, Rajkot and Surat region of Gujarat State. The researcher has taken the sample representation from every direction of Gujarat i.e. North, West, South and East. The population of this study was employees of private sector companies of the major cities in all four regions of Gujarat i.e. Ahmedabad and Gandhinagar in Central Region; Surat, Bharuch, Navsari and Ankleshwar in South Region; Rajkot, Jamnagar, Gondal in Saurashtra region and Mehsana, Palanpur in North Gujarat Region. Researcher’s convenience was considered while selecting the sample from various areas of Gujarat. A total of 450 employees respondent members have participated in the survey through structured research questionnaire, and out of which 400 total respondent members have filled the questionnaire completely. This is an 89 per cent response rate. Out of 450, 50 were void because of incomplete data, not returned in due time, at a time many tick marks etc., i.e. missing frequencies in SPSS Worksheet.

 

Sampling Technique:

The relevant primary data was collected by using non-probability sampling method i.e. Convenience Sampling. Private sector employees from all directions of Gujarat were selected randomly to gather information about their retirement saving behavior.

 

Sample Size Determination:

A survey is being planned to determine what proportion of employees in a certain region are saving for retirement. It is believed that the proportion cannot be greater than 0.50. A 95 percent confidence interval is desired width d=0.05. Now using the formula given below:

 

Here Z = 1.96, p = 0.5, q = 0.5, d = 0.05

 

n = 384.16 ≈ 385

 

Data Collection Instrument:

Primary data was collected through a structured non-disguised questionnaire. The secondary sources include literature review from various journals, magazines and websites, government publication, research reports and survey reports.

 

Data Analysis Techniques:

After editing, coding and classification, Multivariate techniques like Reliability test, Frequency Distribution and ANOVA were used for analysis. The hypotheses have been tested at 5 per cent level of significance. The data have been analyzed by using software like Microsoft Excel and SPSS for windows.

 

Data Analysis:

The 8 Question likert scale instrument were developed which was adopted from Neukam and Herhsey (2003) to measure the employees’ retirement saving behavior. Reliability Statistics of Retirement Saving Behavior Scale is as under:

 

Table 1: Table of Reliability Statistics of Retirement Saving Behavior Scale.

 

Cross Tabulation:

Cross tabulation table was framed to examine the relationship between the age of the respondents and the percentage of income invested for the retirement purpose. Age was considered as one of the important demographical variable affecting the amount of income that was invested for retirement. So the researcher has developed the following hypothesis to check the inter-dependency of the two variables under study i.e. age of the respondents and the percentage of the income invested for retirement. The cross tabulation table developed for these purpose was as under:

 

 

Table.2 : Age * % of Income for Retirement

 

The table 2 showed that the respondents with the age group of 31-40 were maximum and the maximum amount of investment for the purpose of retirement was 11-20 % from the income of the respondents.

 

 

 

ANOVA’S TEST:

ANOVAs test was done to study the effect of age having more than two categories on the overall retirement saving behavior of the respondents. The hypothesis framed to study the relationship between age of the employees and retirements saving behavior as a whole were as under:

H_0.1:There is no significant difference among age group of respondent with respect to their overall opinion about retirement saving behavior.

 

H₁.1:There is significant difference among age group of respondent with respect to their overall opinion about retirement saving behavior.

 

 

Table 3: ANOVA’s Test for Age and Retirement Saving Behavior of Employees

 

 

 

In the above table of ANOVA for the variable retirement saving behavior and age of the respondent, it was found that there was significant difference between age group and the retirement saving behavior indicated by [p₁₌ 0.017 <0.05]. But the degree of difference was unknown and also differences was between which age group criteria were to be found further and for this post hoc analysis were used. Thus post hoc analysis would be done for the difference in age group and retirement saving behavior.

 

Table 4:  Post Hoc Analysis

 

 

The above table of post hoc analysis checks that which age group was more different with retirement saving behavior of all the respondents, and for this pair-wise comparison was made. In retirement saving behavior significant value of all the age criteria was more than 0.05 so no further interpretation could be made.

 

FINDINGS:

From the above derived figures it could be stated that as the age of the respondents was increasing the saving criteria for the retirement was decreasing. This result was derived related to the current status of the society. Young baby boomers are well aware about the pre-requisite need to start early for retirement. Individuals from the young age (below 30 years) were found to be saving for their retirement which could be a positive as well as good sign for the development of the good society as well as economy as a whole. The young generation is proactive as far as their living standard during their last days was concerned. Moreover they wanted to be self-reliant and considering the economic trends prevailing in the economy they were starting to save early itself.

SUGGESTIONS:

The findings revealed that there is significant difference between age and the retirement saving behavior of the private sector employees. This means that the increase in age of the respondent has an impact on the retirement saving behavior of the employees.  Efforts should be made to target those age group who are not aware about the importance of retirement saving.

 

IMPLICATION:

The financial advisor can do personalized assessments and take a step further by studying the one- to-one interventions and attempts to develop "age-appropriate" degree of risk tolerance among investors.

 

CONCLUSION:

Various factors are considered to be responsible for the difference in level of saving by different respondents. These factors could be demographic factors like age, income, marital status, educational qualification etc., psychological factors like future time perspective, financial risk tolerance, financial knowledge, retirement goal clarity, etc., and behavioral factors like Procrastinate and Passivity.  Therefore awareness of importance of saving should be created among the private sector employees by the employers or the financial consultant, among the uneducated, low income group and the households having more earning members.

 

REFERENCES:

1.        Humpel, N., Loughlin et.al. Ageing Baby Boomers in Australia: Evidence informing Actions for Better Retirement. Australian Journal of Social Issues. 2009; 44(4): 399-415.

2.        Carrns, A. Taking Stock (and coming up Siiort) How 50-somethings can act now to make up lost ground. U. S. News and World Report. 2010; 22-28.

3.        Shacklock, K. et. al. Employees Perceptions of the factors affecting their decision to retire. International Journal of Organizational Behavior. 10(5):.740-756.

4.        Hira, T. K. et. al. Determinants of retirement planning behavior and differences by age. International Journal of Consumer Studies.

5.        Demery, D. et.al. Savings-age profiles in the UK. Springer-Verlag. 2005

6.        Neukam, K. A. et al Financial Inhibition, Financial Activation and Saving for Retirement. Financial Services Review, Spring, 2003:12(1)

 

 

 

Accepted on 21.05.2017          © A&V Publications all right reserved