Authors : Stanley Yap, Chong Wei Ying, Leow Hon Wei and Chok Nyen Vui
Abstract: The purpose of this study, is to provide a comprehensive personal retirement planning based on the level of financial literacy in Malaysian household. We identify the importance of financial literacy to make financial decision on Malaysian household retirement planning. Measurements used consist of inflation-adjusted interest rate, future value of the expenses and present value of total retirement fund needed. Therefore, we are able to identify retirement gap that need to be considered immediately. The findings show financial literacy is vital to household retirement planning as with the adequate financial literacy, we conclude that there is no retirement gap where the future value of financial assets is bigger than the total needs during retirement. The financial assets should be prepared in early age to accumulate substantial funding to support household retirement life. Future researches may explore to non-professional and professional to differentiate the level of financial literacy. The financial position may vary when time pass over the time. Therefore, it must be reviewed from time to time to get higher accuracy. The outcome of this finding will be beneficial to society especially to Malaysian working adults. It highlights the importance of financial literacy to retirement planning. It is also a milestone for Malaysian to achieve developed country if Malaysian has sufficient retirement funding. There is currently lack of in-depth research on financial literacy related to household retirement planning. Further, the study also focusses on financial literacy as a means to assist those in funding retirement resources, in order to fulfil the retirement gap.
Stanley Yap, Chong Wei Ying, Leow Hon Wei and Chok Nyen Vui, 2017. The Importance of Financial Literacy on the Malaysian Household Retirement Planning. International Business Management, 11: 1457-1461.