Can Financial Literacy Reduce Anxiety about Life in Old Age?

This study examines whether financial literacy can reduce anxiety about life in old age. We hypothesize that financially literate people are better equipped to make saving decisions, plan for the future, and handle uncertainty, reducing their anxiety about life in old age. The study uses data from a nationwide survey in Japan and probit regression analysis to provide evidence that financial literacy can reduce anxiety about life in old age. The regression coefficients show that financial literacy has a significantly negative impact on the level of anxiety, a relationship that holds after controlling for age, gender, education, marital status, assets, expected social security coverage, house ownership, living with children, and exercise. The results are robust after using different methods to measure financial literacy, and have implications for policies related to aging and risk management. Since financial literacy helps people to reduce risks and uncertainties effectively, policymakers should consider emphasizing financial literacy education early in life to lower anxieties about life in old age.