Additional income and consumption expenditure at retirement in Ajumako – Enyan – Essiam District (AEED) in the Central Region of Ghana

Abstract

PurposePension income provides the main means for augmenting consumption expenditure and maintaining the welfare of households during retirement. Debate on the reduction in consumption expenditure upon retirement due to insufficient pension income is ongoing. This study seeks to investigate the impact of pensioners without additional income apart from SSNIT pension income on their consumption expenditure.Design/methodology/approachThis is a quantitative study. Primary data were used in this study. The population includes SSNIT pensioners who are household heads and aged between 56 and 64 years in Ajumako – Enyan – Essiam District (AEED) in the Central Region of Ghana. The study deployed simple random sampling to sample 164 respondents and estimated the consumption expenditure model using White’s heteroskedasticity-corrected standard errors of OLS.FindingsThe findings show that pension income from SSNIT positively influences consumption expenditure on nondurable goods at retirement. The findings also show a drop in consumption expenditure at retirement by pensioners who do not earn additional income.Research limitations/implicationsThis calls for an increase in the SSNIT pension income paid to persons who are on retirement. Also, employees are encouraged to plan early, save enough resources and invest in their working life before they retire. Variables such as health status and rural/urban areas were not included in the study. Also, panel data would have been suitable for this kind of study, but due to the unavailability of data, cross-section data were used. These are the limitations of the study.Originality/valueThis study investigated the impact of pensioners without additional income apart from SSNIT pension income on their consumption expenditure. The study also examined whether pensioners without additional sources of income apart from SSNIT pension income can sustain their consumption expenditure on nondurable goods at retirement.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2021-0616.