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Financial Literacy Confidence and Retirement Planning: Evidence from China

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  • Bingzheng Chen

    (Department of Finance, School of Economic and Management, Tsinghua University, Beijing 100084, China)

  • Ze Chen

    (China Insurance Institute, Department of Insurance, School of Finance, Renmin University of China, Beijing 100872, China)

Abstract

Though ample empirical evidence demonstrates the relationship between objective financial literacy and retirement planning, we have a limited understanding of the role of individuals’ subjective financial literacy in their retirement planning. In this study, we examine how individuals’ financial literacy confidence bias affects their retirement planning behaviors using survey data in China. Based on the difference between respondents’ subjective and objective financial literacy from survey data, we construct measures of individuals’ financial literacy overconfidence and underconfidence for empirical analysis. Our results document the critical role of individuals’ assessment of financial literacy in their retirement planning. We find that individuals’ financial literacy overconfidence (underconfidence) significantly promotes (demotes) their retirement planning behaviors.

Suggested Citation

  • Bingzheng Chen & Ze Chen, 2023. "Financial Literacy Confidence and Retirement Planning: Evidence from China," Risks, MDPI, vol. 11(2), pages 1-14, February.
    • Handle: RePEc:gam:jrisks:v:11:y:2023:i:2:p:46-:d:1069455
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