Financial literacy, debt, risk tolerance and retirement preparedness: Evidence from New Zealand

This study investigates the effect of financial literacy on debt ownership, debt anxiety and risk tolerance of older individuals. Contrary to prior evidence that financial literacy is not associated with retirement planning in New Zealand our findings suggest that financial literacy is important for retirement preparedness. "Advantage" (high income and education) is a strong factor common to higher financial literacy that results in less debt anxiety or higher risk tolerance/willingness to take more risk. The relationships between financial literacy and risk tolerance and between financial literacy and debt anxiety are complex and vary by subsample cohort and indicate that assuming a simplified nature between these factors may result in misleading relationship generalisations.