Effect of psychological preparedness on pre-retiree retirement planning behavior; a case study of employees of the county government of Nakuru, Kenya

Abstract

Retirement is a period of major changes with diverse consequences in the lives of employees depending on the level of planning and preparedness. Initially, studies focused more on the post-retirement period. However, recently, there has been a shift towards retirement preparedness and planning. This study sought to assess the effect of psychological preparedness on pre-retiree’s retirement planning behaviour - a case study of the County Government of Nakuru, Kenya. Specifically, the study sought to: determine the effect of future time perspective, retirement goal clarity, perceived financial planning knowledge, financial planning activity level and perceived savings adequacy on pre-retiree’s retirement planning behaviours of pre-retirees in the County Government of Nakuru, Kenya. The study adopted a cross sectional research design and was guided by the role theory and continuity theory. The target population was the 419 permanent and pensionable employees at the County Government Head Quarters in Nakuru town in the year 2019. A random sample of 201 employees was selected who were the respondents to the study. Primary data was collected by use of structured questionnaires. Data was analyzed by use of descriptive statistics, Pearson correlation analysis and regression analysis. The results from the simple regression analysis on objective one to five revealed that future time perspective (F = 9.481, p = 0.003), Retirement goal clarity (F = 31.592, p = 0.000), knowledge of financial planning (F = 37.312, p = 0.000), financial planning activities (F = 41.114, p = 0.000) and perceived savings adequacy (F = 11.498, p = 0.001) were significant, positive predictors of pre-retiree retirement planning behaviour. The multi regression analysis on the final objective revealed that hat psychological preparedness (future time perspective, Retirement goal clarity, knowledge of financial planning, financial planning activities and perceived savings adequacy) were significant predictors of pre-retiree retirement planning behaviour (F = 12.386, p = 0.000). The study concluded that there is need for psychological preparation for pre-retiree’s retirement as it builds positive behaviour such as employee engagement and organizational behaviour and elicit positive retirement expectations. To achieve this, the study recommends that the County Government of Nakuru structures focus on retirement plans with the employees to assists the employees in setting up future goals. In addition, the employees should be exposed to financial planning awareness programmes and be encouraged to join saving schemes for the future. The current study is significant to those charged with governance as it will assist in providing information on the psychological preparedness of employees and how to prepare them for their retirement life.