Retirement Preparedness among Malaysia’s Low-Income Private Sector Employees: A Conceptual Model

Retirement in Malaysia starts when individuals reach 60 years old. This is when individuals’ income will stop streaming in, and they need to use their savings, pensions or retirement scheme to support themselves post-retirement. There are two primary retirement schemes in Malaysia, which include (1) Defined Benefit (DB) for government servants and (2) Defined Contribution (DC) for private-sector workers managed by the Employee Provident Fund (EPF). The increasing aging population and the rise in retirees in Malaysia with a lack of retirement savings emphasize the significance of retirement preparedness. The life expectancy in Malaysia has increased, with males and females having an average lifespan of 71.8 years and 77.2 years, respectively. Malaysia's income groups can be divided into three groups: T20 (top 20%), M40 (middle 40%), and B40 (bottom 40%). This study will only focus on private sector employees with EPF accounts and the B40 group with an income of RM4850 and below. The B40 has the lowest savings in EPF, with only 1.01%, compared to the M40, which amounts to 16.56%, and the T20, which holds the most savings at 82.42%. The main objective of this study is to investigate retirement preparedness among low-income (B40) private-sector employees. By focusing on the direct relationship between attitude and social influence and their impact on retirement preparedness, the findings are intended to support financial institutions, policymakers, and organizations in designing and implementing effective financial education and literacy programs tailored to the needs of the low-income (B40) group.