Abstract

Financial literacy provides individuals with the knowledge to improve their economic decision-making, contributes to greater financial stability, and is a strong predictor of retirement planning, as those who have higher financial literacy tend to plan more effectively for retirement. However, financial literacy is low worldwide and is unevenly distributed, with lower-income, less-educated women exhibiting lower financial literacy levels compared to their male counterparts. There are similar disparities within retirement planning, where more highly educated men are more likely to demonstrate retirement planning behaviors. This study utilizes the data from the 2022 wave of the Survey of Household Economics and Decisionmaking (SHED) to examine the impact of gender on financial literacy. Additionally, the analysis explores the combined impact of financial literacy and gender on retirement planning. Using a probit regression model and controlling for socioeconomic variables, this research finds that women have lower levels of financial literacy and also contribute less to retirement planning; low financial literacy is also associated with poor retirement planning. The findings are robust in terms of both sign and significance and underscore the need for intervention. This study, unlike previous research, examines all three variables in conjunction. Policies supporting financial literacy across all demographics could help close the gap in both financial literacy and retirement. Mandatory financial education as early as high school can also improve financial literacy and help close the educational gap between various populations.

Keywords

Financial Literacy, Gender Differences, Retirement Savings, Retirement Planning

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