Financial Literacy and Financial Preparedness for Retirement among Permanent and Pensionable Employees in State Owned Corporations in Nairobi, Kenya.
Agunga Mourine A., Jagongo Ambrose (PhD) & Ndede Fredrick W. S. (PhD)

Abstract
Personal finance literature underscore the fact that only a minority of households feel confident about their saving adequacy on retirement because little is known about why people fail to plan and prepare for eventual retirement and even among households with similar socioeconomic characteristics savings and wealth vary considerably. Further, questions abound on whether planning and financial preparedness costs affect retirement saving patterns considering that many households arrive close to retirement with little or inadequate financial resources to maintain their lifestyle. To better understand these issues, exploring the tradeoff between saving and consumption needs to be a priority given that saving for retirement is an important decision individuals in active employment have to make over their working lifespan. This paper therefore sought to investigate the effects of financial literacy on financial preparedness for retirement amongst permanent and pensionable employees in state owned corporations in Kenya. Specifically the study sought to establish the relationship between knowledge of financial instruments as well as the computational capability of retirement benefits and financial preparedness for retirement amongst employees as moderated by demographic characteristics and financial factors. This study used a descriptive survey design. The population for this study consisted of all employees (on permanent and pensionable terms) of state corporations in Nairobi, Kenya estimated to be 4,619 employees. Purposive sampling method was used to select a representative sample of 384 respondents from the 29 state Corporations. The 29 corporations were selected on the basis of those corporations that had headquarters in Nairobi Central Business District, this is arrived at having also considered their long term employment in nature, compliance to statutory requirements on remittance of retirement benefits and above all duty to contribute to government agenda for national development to which preparedness for retirement is considered a major factor. Primary data was collected using self administered questionnaires and the data was analyzed using descriptive and inferential statistics of means, standard deviations and stepwise regression analysis respectively to test the relationship between the independent and dependent variables and presented in tables. The study found that financial literacy positively affects financial preparedness for retirement. However, Knowledge of financial instrument was found to be insignificant while computation capability for retirement was significant. Results revealed that both demographic characteristics and financial factors bore positive statistical relevance. Key words financial literacy, Financial Preparedness retirement planning, demographic characteristics, financial factors.

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