Sibanisezwe Alwyn KHUMALO, Nobukhosi DLODLO

RATIONAL AND IRRATIONAL INDICATORS OF FINANCIAL EFFICACY AND DESIRABLE SAVINGS BEHAVIOUR AMONG EAST LONDON LOW-INCOME CONSUMERS

Since the principal source of retirement income is savings, the significance of projecting desirable savings behaviour during the pre-retirement phase can never be overestimated. Notably, the majority of low-income consumers in South Africa are not sufficiently prepared for retirement. This provides fertile ground for clarifying the importance of positive long-term savings behaviour. This study aimed to present a composite view by delineating both rational and irrational markers of financial efficacy and self-reported savings behaviour, whilst simultaneously discussing how such determinants can be predisposed towards increasing an individual’s retirement savings rate. Procedural techniques in the form of multiple regression analysis quantified the impact of financial risk tolerance, perceived income adequacy and social norms influence on individuals’ efficacy towards long-term savings behaviour. The findings of this study have practical implications for financial advisors, on how increased financial needs awareness amongst low-income consumers regarding future retirement life may be generated. Furthermore, this paper contributes towards the development of thriving communities by proffering knowledge on enhancing resource utilisation in lieu of increasing long-term financial security among low-income households.

Keywords:

Retirement, financial efficacy low-income consumers, savings behaviour.,

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