FINANCIAL LITERACY AND ITS IMPLICATION TO FINANCIAL WELL-BEING TOWARDS PREPARATION OF BEING RETIREES AMONG INDONESIAN HOUSEHOLD

• Main Author: Olivia Augustine, Michelle
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/61158
• Institution: Institut Teknologi Bandung

Retirement age, a cycle of time in which people will pass the time in one lifetime. In Indonesia, there is no integrated mandatory pension fund allocation program, unlike in some countries that have such system, such as Denmark or other European countries. Therefore, people should be able to make their own retirement plan. However, the information about investment products and pension funds are not easy to retrieve. And as a result, most of the retired people do not have pension funds and they have to rely on financial support from other parties. This research was conducted to uncover the relationship between financial literacy, financial behaviour, family support, number of financially dependent family members, and retirement planning on the financial well-being of the retired people. The survey was orchestrated on 300 people who live in Bandung. Hypothesis analysis was carried out using the Partial Least Square (PLS) method, a structural equation modeling technique. The results of this study discover that financial literacy does not have a direct impact on the financial health of retirees. However, financial literacy will affect a person's financial behavior and retirement plans, both of which will have a significant impact on the financial health of retirees. Another factor that should be underlined is that the family support has a more direct impact on the financial well-being of retirees than financial literacy. The government also needs to increase public awareness about the importance of financial planning, particularly about financial planning for retirement and the means to achieve this, namely by increasing financial literacy from early age.