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Financial literacy and retirees' resource allocation decisions in New Zealand

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  • Noviarini, Jelita
  • Coleman, Andrew
  • Roberts, Helen
  • Whiting, Rosalind H.

Abstract

We investigate the relationship between financial literacy, debt anxiety, risk tolerance, and subsequent resource allocation decisions for cohorts of retirees. Using a survey and the novel comparative method of Multi-Criteria Decision-Making Analysis we prioritise retirement allocation choices of older New Zealanders. Retirees display high financial literacy and together with debt anxiety this is significantly correlated with resource allocation preferences. Financial literacy reduces debt anxiety in men, increases the risk tolerance of women and is associated with a higher preference for KiwiSaver. Greater debt anxiety is associated with debt repayment, and debt avoidance in old age is critical to long-term wellbeing.

Suggested Citation

  • Noviarini, Jelita & Coleman, Andrew & Roberts, Helen & Whiting, Rosalind H., 2023. "Financial literacy and retirees' resource allocation decisions in New Zealand," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:pacfin:v:79:y:2023:i:c:s0927538x23000513
    DOI: 10.1016/j.pacfin.2023.101985
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    More about this item

    Keywords

    Financial literacy; Retirement spending; Personal debt; Risk; KiwiSaver;
    All these keywords.

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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