Financial Literacy and Retirement Planning in Saudi Arabia

Abstract

This study investigates the correlation between financial literacy and retirement planning behavior within the Saudi Arabian workforce. To explore this relationship, a survey involving 500 employees was conducted to evaluate their levels of financial literacy and their engagement in retirement planning activities. The study's findings indicate a positive connection between financial literacy and retirement planning, implying that individuals with greater financial literacy tend to be more actively involved in retirement planning endeavors. In particular, the research reveals that individuals with higher financial literacy scores exhibit a greater propensity to possess retirement savings, proactively plan for retirement, and seek professional financial guidance. For instance, those with elevated financial literacy scores were found to be 2.5 times more likely to have retirement savings in comparison to their counterparts with lower financial literacy scores. Similarly, individuals with higher financial literacy scores were three times more inclined to consult professional financial advisors than those with limited financial literacy. Furthermore, the study undertook an examination of demographic variables and their impact on retirement planning behavior. The outcomes underscore the significance of age, income, and educational attainment as influential factors in retirement planning. For instance, the research revealed that older employees displayed a higher likelihood of having retirement savings and actively engaging in retirement planning as compared to their younger counterparts. Additionally, individuals with greater income levels and higher educational qualifications exhibited a greater inclination towards participating in retirement planning activities compared to those with lower income levels and educational attainment. The implications of this study emphasize the pivotal role of enhancing financial literacy among Saudi Arabian workers to foster retirement planning and align with the objectives outlined in Saudi Vision 2030. Accordingly, the study recommends that policymakers and employers take proactive measures to promote financial education initiatives and provide resources tailored for retirement planning. Such resources may include retirement savings plans and facilitating access to professional financial advisors. By implementing these measures, Saudi Arabia can empower its workforce to attain financial security, thereby contributing to the nation's economic prosperity and development goals.