Abstract:

Investigating retirement planning behavior of financially (il)literate citizens in Croatia Individuals are becoming increasingly responsible for securing their own standard of living after retirement.  The current retirement system is confronted with various problems related to population aging, increased life expectancy, younger population emigration and an unfavorable ratio of retirees to workers. Also, many individuals in Croatia have not managed to develop an adequate retirement saving plan. The research is aimed at discussing financial literacy of Croatian financial consumers and classifying them based on the level of financial literacy. The purpose is to investigate level of engagement in planning for retirement of financially literate and illiterate individuals. Furthermore, other characteristics of financially literate/illiterate consumers such as age, income, number of household members and level of education are also investigated. Clusters of financially (il)literate consumers are obtained using K-means approach. The conducted empirical analysis discloses that individuals with higher level of financial literacy are highly involved in retirement planning, are older, have a higher level of general education, and have higher income and lower number of household members. The findings of this research may serve as a foundation for development and improvement of national financial and retirement policy measures and for further development of both financial literacy and retirement planning programs.