Navigating risk: Impact of overconfidence in financial literacy on retirement wealth reserves

Zihao Hu, Dong Zhang and Xueping Xiong

Finance Research Letters, 2024, vol. 69, issue PA

Abstract: This study examined the impact of overconfidence in financial literacy on risky asset investments within retirement wealth reserves. We used data of 36,268 respondents of the “China Aging Finance Survey” (2020–2022). The findings reveal that overconfidence significantly drives households toward riskier investments, and the conclusions were reinforced through robustness checks. Furthermore, the effect was moderated by pension replacement rate satisfaction, willingness to pay for financial advice, and risk preferences. Heterogeneity analysis indicates that male respondents and less educated respondents were significantly affected by overconfidence. Moreover, respondents with basic pension insurance were likelier to opt for risky assets.

Keywords: Financial literacy; Retirement wealth reserves; Overconfidence; Aging Finance; Risk Management (search for similar items in EconPapers)
JEL-codes: D14 D91 G11 J26 O16 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324011255

DOI: 10.1016/j.frl.2024.106095

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