Perceptions of retirement adequacy in Lesotho : behavioural and socio-economic influences

Abstract

Saving for retirement has become more complicated for employees due to the complexity of the financial decisions involved. Financial decision making is believed to be associated with a number of behavioural and socio-economic factors, and these factors may in turn be related to whether employees perceive themselves to be adequately saving for retirement. This study assesses which factors predict whether individuals working in both the financial and non-financial sectors in Lesotho perceive themselves to be adequately preparing for retirement. The main focus is on financial literacy, financial risk tolerance and future time perspective. As a secondary focus, the study looks at potential differences between two sectors of employees that may be attributed to differing levels of financial literacy. Data was collected using an online survey from 107 banking and 93 non-banking employees in Lesotho and analysed using bivariate and multivariate techniques, with a linear regression model used in terms of the multivariate analysis. This study finds that financial literacy, financial risk tolerance, and future time perspective are all positively related to perceived retirement adequacy in the bivariate analysis. In the multivariate analysis, for those working outside the financial sector, objective financial literacy, subjective financial literacy and future perspective were positively related to perceived retirement adequacy. Whereas for those in the financial sector; higher levels of future time perspective, higher household income and being older were all associated with higher levels of perceived retirement adequacy providing insights to industry role players about the profile of individuals who are confident about retirement savings and how this contrasts with those who are not confident.