READINESS FOR RETIREMENT: A THEORY DEVELOPMENT APPROACH

Laurence L. Garcia Faculty, Cebu Normal University

laurence@cnunursing.org
ABSTRACT
Older workers are staying in their jobs longer and are fraught to find a new job according
to a report from the Bureau of Labor Statistics. Today, more older workers are in the labor
force (Weller, 2009). This study aims to discover the factors affecting an older persons
readiness for retirement considering the different aspects of human being: physical, social,
emotional, financial, and spiritual. Inductive approach to theory development was used to
create a theory to explain the occurrence of the phenomenon observed. A readiness for
retirement test was used to determine their readiness to retire. Data were randomly
collected from working older persons with ages 50 65. It was analyzed using cluster
analysis, clustering the data into three aided by Minitab. Results revealed that older
persons, ages 56 60, married, Roman Catholics, with white collar jobs, living with
dependent child, average monthly income of Php 20, 001 30, 000, working for 26 30
years, going to church twice a week are more prepared for retirement. Readiness for
retirement is dependent upon financial capacity, social support and preoccupation after
retirement. Considering these factors before reaching retirement age will guide actions to
make retirement decision easier. Keywords: retirement, readiness, financial capacity, social
support, preoccupation
INTRODUCTION
Retirement is a period of liberty, exploration, and personal enjoyment. However, to many
older people, a change away from a work of a lifetime involves some hesitation and
stimulates many queries. The choice to retire can be sparked by several factors: reaching
retirement age, accomplishing savings goal, or being laid off from a highly competitive job
market. To be able support retirement without income from a job, older workers have to
make a series of choices about insurance, health coverage, and investments (Brandon,
2011). The United States of America is in the midst of a severe retirement crisis. According
to the data from the Bureau of Labor Statistics, older workers are holding on to their jobs
longer and are worried with finding a new one if they lost their old jobs. Today there is an
increase in the number of older workers in the work force compared to the case in the past
decades (Weller, 2009). Working part-time is also progressively becoming common in the
retirement years. Many older people try working in a job with shorter work hours and less
responsibility before retiring completely, while other older people return to work after a
break (Brandon, 2011). This situation raised a lot of question. Why do older workers opt to
hold on to their job instead of enjoying their older years? What stops them from leaving
their jobs? Why do they have to find new jobs after leaving their previous jobs? This study
aims to discover the factors affecting an older persons readiness for retirement taking into
consideration the different aspects of a human being: physical, social, emotional, financial
and spiritual.
LITERATURE REVIEW
The choice to retire can be restricted by selected circumstances even though it is usually
considered voluntary (Szinovacz and Davey, 2005). Many adults are working past

retirement age or begin part-time work in a new field. Others are actively engaged in a
variety of volunteer projects that may substantially benefit their communities (Mauk,
2006). Until recently, Social Security laws placed economic barriers against retirement
before the mid-60s, but as years of healthy life expectancy increase, society is reframing its
notions about the capability of older adults to make valuable contributions (Uhlenberg,
1992). Employees opt for early retirement due to a variety of reasons like physiological,
psychological, social, and economic reasons. Employees who choose such must have to face
financial difficulties, since retirement often necessitates a loss of perquisites and earning.
Psychological concern is another issue. Retirees are confronted with changes in
roles that raise questions of self-image, values, power, and security. An identity crisis is a
another early retirement concern. Many retirees face boredom. Type A behavior, skill
obsolescence, health, and economic well-being have been found to influence the decision to
retire. Attainment of job-related goals, job characteristics, marital and family
circumstances, and leisure pursuits are environmental factors that may influence the
decision to retire. The main issue early retirees must face is whether their income will be
sufficient. Financial readiness requires careful planning (Paul and Townsend, 1992). The
complex needs of older adults include declining health and functioning that may require
moving to more supportive environments. Psychological challenges facing older adults
include dealing with social and economic losses, finding a meaningful life after retirement,
and contemplating death. Cultural, spiritual, regional, socioeconomic, educational, and
environmental factors along with health status influence older adults views and choices
about their health care needs (Mauk, 2006).
Theory Generation
Inductive approach to theory development was used to create a theory that would explain
the occurrence of a phenomenon that was observed. A research questionnaire was made to
uncover all the factors that can affect a persons readiness for retirement. It is composed of
questions regarding the personal profile of the older adult, trying to incorporate the
different aspects of a human being. Items include the age, gender, marital status,
profession, number of dependent children, average monthly income, number of years in
service, achievements, company at home, membership in organizations, religion, and
church visits. Each item is provided with choices where the respondent will only choose an
option that is applicable. A readiness for retirement test was also used as tool to determine
their readiness to retire. Data were randomly collected from a chosen population covering
older persons with ages 50 65 from Cebu City who are currently working. The data were
analyzed using cluster analysis, grouping the data into three clusters with the aid of
Minitab.
Preliminary Data Analysis
The findings of these data analysis will lead to the formulation of hypotheses.
Table 1.Cluster Analysis
Variable
Age
Gender

Cluster1
2.0000
1.5385

Cluster2
1.7273
1.3636

Cluster3
1.7333
1.7333

Grand centrd
1.8000
1.5200

Marital Status
Profession
No. of Dependent Children
Average Monthly Income
No. of Years in Service
Achievements
Company at Home

1.9231
4.4615
2.3077
3.9231
2.6923
1.6923
2.6923
Membership in Organizations 1.5385
Religion
1.1538
Number of Church Visits
3.0000
Readiness for Retirement 3.0000

1.8636
5.1364
2.9091
3.3182
2.9091
1.5909
9.7273
1.6364
1.0909
2.0909
2.8636

2.0000
5.4667
3.4000
2.4667
1.6667
1.6667
14.3333
1.8667
1.1333
2.1333
2.7333

1.9200
5.0600
2.9000
3.2200
2.4800
1.6400
9.2800
1.6800
1.1200
2.3400
2.8600

The result of cluster analysis revealed that in terms of age, older persons at the age of 56
60 are more prepared to retire. In terms of gender, both men and women have the same
level of readiness for retirement. Married individuals are more prepared for retirement.
The result also revealed that doctors and engineers are more prepared for retirement
which can be explained by the number of those professionals who were included in the
study. Older persons having only one dependent child and with average monthly income of
Php 20, 001 30, 000 are more ready for retirement. Those who have worked for 26 30
years even though they have no achievements are ready to retire. Older persons living with
children are more ready for retirement. Membership in organization does not necessarily
predict readiness to retire. Roman Catholics are more ready for retirement which can be
explained again by the number of Roman Catholics who were included in the study. Lastly,
those who go to church twice a week are more prepared for retirement.
Derived Hypotheses
From the Preliminary Data Analysis, these hypotheses were derived.
Hypothesis 1: Older persons at the age of 56 65 are ready for retirement.
Any employee are obliged to retire upon reaching the retirement age as stated in Article
287 of Presidential Decree No. 442, as amended, also known as the Labor Code of the
Philippines. The age of sixty (60) years or more, but not beyond sixty-five (65) years is
declared as the compulsory retirement age. This law is a possible reason for a persons
readiness for retirement. Knowing that there is a mandated age for retirement, a person
automatically prepares himself for retirement when reaching that age. This age is within
the Stage of Middle Adulthood based on Erik Eriksons Theory of Psychosocial
Development, wherein a person does things that would contribute to the welfare of future
generations. This is also the time when a person does things so that he or she will have an
enjoyable retirement, making sure that while he or she can still work, all efforts are made
for assurance of the future. People who succeed during this phase may feel that they are
contributing to the world by being active in their home and community (Cherry, 2012).
Hypothesis 2: Married individuals are more prepared for retirement.
Retirement is the period that married couples may look forward to, for this provides a
chance to renew their relationship without the burdens of reporting to work every day.
Married individuals should talk about retirement and start to anticipate it together with
considerations on the roles they're now going to play. Couples should consider the time

they want to devote with each other. Finances also need to be discussed. Couples have to
anticipate what retirement will really be like, so they're not shocked (Treat, 2005).
Hypothesis 3: Lesser number of dependent children makes an older person ready for
retirement.
According to the National Endowment for Financial Education, fifty-nine percent of parents
support their adult children (ages 18 to 39) who aren't in college financially. Parents help
their adult children with living expenses, with transportation costs, and with spending
money. Nearly half of the parents said it was because they were "legitimately concerned"
with their child's financial well-being, and others said it was because they didn't want their
children to struggle financially like they once did. Providing financial support to adult
children can have serious financial implications for retirement according to Pat Seaman, a
spokesperson for the NEFE. Old parents may not be able to save enough money for their
retirement. Some parents had to postpone retirement as a result of their financial support
of their children. More than one in 10 had to delay a major life event (MSN Money, 2011).
Hypothesis 4: White Collar workers are more ready for retirement. White collar workers
are assumed to get more salary compared to blue collar workers. In relation to savings and
retirement, white collar workers are also expected to be more ready for retirement since
they are able to save more.
Hypothesis 5: Individuals with higher income are more prepared for retirement.
An individual can be financially ready for retirement when the mixture of Social Security,
traditional pension, and investment income assures enough finances to be spent for
projected expenses for the rest of his or her life (Brandon, 2011).This is possible if the
person has enough income to pay for the contribution for the life plans.
Hypothesis 6: The longer the number of years in service the more the person becomes
ready for retirement.
Section 13(b) of RA 8291 focuses on Expanding and Increasing the Coverage and Benefits
of the Government Service Insurance System, Instituting Reforms Therein and for Other
Purposes provides that retirement shall be compulsory for an employee at sixty five years
of age with at least fifteen years of service except if the service is extended by appropriate
authorities. Employees who have serve less than fifteen years may be allowed to continue
in the service in accordance with existing civil service rules and regulations. The longer an
employee is working the more reason he has to retire since he can already receive
appropriate benefits from employer.
Hypothesis 7: Older persons living with children are more ready for retirement.
Older peoples choice of living with their children and grandchildren or in
retirement facilities rests on their personal decision and the situation in which they are in.
They have to live with their children and grandchildren for the reason that old people are
like infants who need constant care and attention due to other medical conditions which
may require assistance from people around. There are people who may or may not be
financially capable to live in retirement homes. It is the childrens primary responsibility to
take care of their parents at their old age. Most of the parents in India live with their

children in their older age. This practice develops bond between different age group and
connects the gap between them. Younger generation can acquire a lot of knowledge from
the older generation whereas older generation can identify the progress which the newer
generations are making. Furthermore, staying with the family creates a feeling of safety and
warmth which might be absent in any other type of dwellings (Irianto, 2009).
Hypothesis 8: Religiosity and church attendance help in getting ready for retirement.
Believing in the almighty and church attendance were more strongly linked to retirement.
However, church attendance is much more constant across retirement than other social
activities. Correlational analysis revealed that there may be an increase in individual
change in religious belief and behavior in old age than previously reported. The topic of
religious belief and behavior among the elderly has long been popular with social
gerontologist. Because religious roles can be maintained across the life span, they provide
many older people with a degree of continuity in their lives. It is also clear that religious
organizations are important voluntary associations which can provide a significant
community tie for the isolated old person. And, of course, there is always the implicit
assumption that old age triggers concerns about death and the meaning of life that are
assuaged by religious involvement (Glamser, 1987).
Propositions
From the hypotheses, these propositions were derived.
Proposition 1: Reaching retirement age while living with your spouse and children will
make retirement decision easier.
An individual at the age of 56 -60 who is still married and is living with children is more
prepared for retirement (Hypothesis 1, 2 and 7). Elders who were married and healthy
were more likely to report a desire for an energetic lifestyle (Mauk, 2006). Psychological
and emotional effects of having someone beside you at the time of retirement make the
older persons comfortable with leaving their jobs.
Proposition 2: Having a decent job and a remarkable income with lesser dependents to
support will help you get ready for retirement.
An older person with white collar job earning higher salary with lesser number of children
to support is more ready for retirement (Hypothesis 3, 4 and 5). The increase in savings
and assurance of lesser financial demands from children after retirement would ease
retirement decision. The older persons with reduced financial difficulties to face are more
poised in facing retirement.
Proposition 3: Staying in a white collar job while earning a high salary for a number of
years contributes to readiness for retirement.
An elderly working for quite a number of years in a white collar job and earning a
remarkable income is more equipped to retire (Hypothesis 4, 5 and 6). Financial stability,
which is said to help in the retirement decision, is more achievable if the older person has
been working in a good paying job for a number of years. These kinds of jobs provide better
opportunities for a person to save enough funds for retirement.

Proposition 4: Socialization and religiosity assist in the older persons decision to retire.
An elderly living with children who firmly believes in the supernatural and constantly goes
to church is a lot ready for retirement (Hypothesis 7 and 8). Socialization and staying
socially active play a greater role in the readiness for retirement. An older person who
knows that when he/she retires, someone will be with him/her and that he/she still has
something to do during his/her retirement years would not fear isolation brought about by
retirement.
Theory Generated
Readiness for retirement is contributed by economic and sociocultural planning.
CONCLUSION
An older persons decision regarding retirement is dependent on the financial capacity,
social support and the possibility of having something to do after retirement. When these
factors are not met, an older person may opt to continue working, adding a large number of
elderly in the workforce and compete with workers from other age groups. Taking these
factors into consideration before reaching retirement age will help a person plan in
advance the things to do to make retirement decision easier.
RECOMMENDATIONS
Future endeavors focusing on the older persons readiness for retirement must find a way
on how to directly answer the question on why older persons are clinging to their jobs.
Further studies must be made to validate the theory generated. Studies must be done on
readiness for retirement of older workers who have previously retired and returned or
worked in a new job. Studies can also be made on the readiness for retirement of nonprofessional workers, workers who have worked away from family, workers who have
stayed in the same job since they started working, and comparison of the readiness for
retirement of different professional workers.