LIFE-CYCLE, INCOME AND INSTITUTIONAL DETERMINANTS OF RETIREMENT PLANNING: EMPIRICAL EVIDENCE FROM BOSNIA AND HERZEGOVINA

Abstract

This paper empirically examines the determinants of supplementary retirement saving planning among employed middle-aged individuals in Bosnia and Herzegovina, with a particular focus on the role of age, income, and institutional trust in the public pension system. Grounded in life-cycle theory and institutional economics, the analysis is based on survey data collected from a sample of 321 respondents and employs a binary logistic regression model complemented by marginal effects analysis.

The results indicate that age and income are key determinants of supplementary pension saving planning, with higher income levels significantly increasing the probability of long-term financial planning. Empirical findings further show that distrust in public pension system reforms increases the likelihood of individual supplementary retirement planning. A robust specification incorporating an interaction term between age and income confirms the presence of heterogeneous life-cycle effects: age exerts a stronger effect among lower-income groups, whereas among higher-income groups the probability of retirement planning remains high already at earlier stages of the working life.

The findings have important implications for pension policy design in transition economies, suggesting the need for a combination of fiscal incentives, institutional reforms, and behavioral instruments to increase participation in supplementary pension saving schemes. The paper contributes to the literature by identifying heterogeneous life-cycle patterns in financial behavior and by integrating institutional trust into the microeconomic analysis of retirement planning.