Financial literacy, financial Management practices, and retirement confidence among Women working in government Agencies: A mediation model

With longer life expectancies, women live more years in retirement and are at greater risk for outliving their assets. Women earn less than men in nearly all occupations. Lower earnings over the course of their careers jeopardize women’s retirement security. With income that is only a fraction of men’s, women are more likely to live in poverty and depend on Social Security to make ends meet. An enjoyable retirement experience brings gratification and proper and careful retirement planning during the pre-retirement stage is essential in order to achieve this dream. Concerns regarding the retirement experience of pre-retirees are growing globally. Numerous discussions on factors affecting retirement confidence can be found in academia. The present study employed structural equation modeling in the attempt to examine the mediating role of financial management practices on the relation between financial literacy and retirement confidence. A mediation model was tested on a sample of Malaysian working women. The sample consisted of 626 of working women in goverment agencies which was selected through multi stage sampling technique. Five states in Malaysia will be randomly selected in the first stage. At the second stage, a random sampling of the government agencies were identified in urban areas based on a listing of the departments from the government websites. Data were collected through self-administered questionnaires. Of the 626 participants, the mean age was 36.06 years (SD= 9.855). As for marital status, the majority of the participants (73.0%) were married. The results show the effect of financial literacy on retirement confidence is purely indirect, fully mediated by financial management practices. The present study used bootstrapping to further test the mediating effect. The paper also finds the direct impact of financial literacy on retirement confidence was less after controlling for financial management practices and there is significant indirect relation was found between financial literacy and retirement confidence. Clearly, financial management practices significantly mediated the relation between financial literacy and retirement confidence. Significant relations were found between financial literacy, financial management practices, and retirement confidence. Earlier analysis revealed that the relation between financial literacy and retirement confidence is spurious, as the relation is fully mediated by financial management practices. The findings of the present study have practical implications on developing effective financial literacy training programmes. There is no doubt that financial literacy training is essential in building retirement confidence. However, future training should include elements that can encourage healthy financial management practices.