The relationship between financial literacy and retirement planning in Nairobi, Kenya
Gitari, Jennifer N
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Financial knowledge has been defined as the ability to make informed judgments and to make effective decisions regarding the use and management of money (Worthington, 2005). Financial knowledge enables individuals to build their financial skills and gives . them confidence to undertake financial decisions for their pension schemes (Agnew, Szykman, Utkus, & Young, 2007). Knowledge on savings and plans to save is critical for effective long-term financial decision making that is relevant to pension funds. The population of the study comprised of members of registered pension schemes in Nairobi. Stratified sampling was used to select respondents from each of the sampled schemes. A self administered questionnaire was delivered to the respondents and collected after completion. Data was analyzed using SPSS version 16. The T test was used to examine the data with the objective determining whether there is a significant relationship between financial literacy and retirement planning. This research shows that, for members of pension schemes, financial literacy, income and education level are a significant determinant of the amount of money individuals have saved for retirement. These research further shows that demographic factors like age and year's individuals have been married are not a significant determinant for individuals in occupational schemes.