Financial Literacy and Retirement Preparedness among Government Employees: A Correlation Analysis

Abstract

The increasing number of senior government employees poses significant challenges for the retirement system worldwide. Many senior government employees in the Philippines, particularly in rural areas such as Cateel, Davao Oriental, face financial instability due to inadequate retirement planning, excessive reliance on public pensions, and limited financial education. This study aimed to investigate the level of retirement preparedness among senior government employees, their financial literacy, and whether significant differences existed based on demographic characteristics, financial behaviour, self-efficacy, well-being, and retirement-related practices.  This study assessed the financial literacy and retirement preparedness of 73 nearing-retirement government employees—38 LGU personnel and 35 public school teachers—in Cateel using a quantitative descriptive design. A quantitative-descriptive correlational design was used to explore the relationship between financial literacy and retirement preparedness among government employees. Data were collected through standardised surveys and analysed using descriptive statistics, Pearson correlation, ANOVA, and t-tests. Findings revealed that respondents had a high level of financial literacy (x̄ = 3.75), particularly in the areas of financial behaviour, self-efficacy, financial well-being, and financial planning. However, their perception of their current financial status was only moderate (x̄ = 3.25). Retirement preparedness was also rated high (x̄ = 4.00), particularly in terms of saving behaviour and planning. No significant differences in financial literacy were observed based on age, gender, or marital status, but salary level showed a significant effect (F = 3.775, p = 0.014). A moderate and significant correlation was found between financial literacy and retirement preparedness (r = 0.559, p < 0.05), particularly in terms of financial behaviour and well-being. It recommends further research across varied demographic and socio-economic groups to explore factors influencing financial perception and preparedness. Additionally, future studies recommend examining the sustainability of current retirement plans and developing targeted interventions to bridge the gap between financial perception and actual preparedness. The findings revealed that overall financial literacy had a moderate and significant relationship with retirement preparedness (r = 0.559, p < 0.001), suggesting that employees with a better understanding of finances tended to be more prepared for retirement.