Determinants of retirement wealth adequacy: A case study in Malaysia

Ros Idayuwati Alaudin, Noriszura Ismail, Zaidi Isa

Research output: Contribution to journalArticle

Abstract

This paper aims to study the demographic and socioeconomic determinants of retirement wealth adequacy in Malaysia, and further investigates the effects of Employees Provident Fund (EPF) contribution rate and income replacement ratio on the retirement wealth adequacy. The retirement wealth adequacy is estimated using the Malaysian Household Income Survey (HIS) 2009 data which is based on 5881 sample households that contains information on income, demographic and socioeconomic characteristics of each household. The adequacy of retirement income is assessed by comparing the accumulated projected wealth of an individual’s work life at retirement age with his/her total consumption (needs) during retirement. The Ordinary Least Squares (OLS) and logistic regression models are then performed to determine the demographic and socioeconomic determinants of retirement wealth adequacy. The results from the projection of wealth-need ratio showed that 69% of households in the sample have adequate retirement income. The OLS model showed that Region 4 (P. Pinang, Selangor, Kuala Lumpur, Putrajaya), urban strata, married status, college graduate, government servant, younger respondent (age 30-34), and average annual income (RM25,000 -RM40,000) were positively associated with retirement wealth adequacy. On the contrary, the results from the logistic model show that only strata (urban) and marital status (single-female) were positively associated with retirement wealth adequacy. This paper further discusses the study implications.

Original languageEnglish
Pages (from-to)81-98
Number of pages18
JournalInstitutions and Economies
Volume9
Issue number1
Publication statusPublished - 2017

Fingerprint

Retirement
Wealth
Adequacy
Malaysia
Income
Household
Demographics
Ordinary least squares
Socio-economics
Retirement income
Socioeconomic characteristics
Retirement age
Logistic regression model
Contribution rate
Household income
Replacement
Survey data
Demographic characteristics
Logistic model
Government

Keywords

  • Consumption
  • Regression
  • Retirement adequacy
  • Wealth

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics, Econometrics and Finance(all)

Cite this

Determinants of retirement wealth adequacy : A case study in Malaysia. / Alaudin, Ros Idayuwati; Ismail, Noriszura; Isa, Zaidi.

In: Institutions and Economies, Vol. 9, No. 1, 2017, p. 81-98.

Research output: Contribution to journalArticle

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