Financial knowledge, ability and tools to make

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Financial literacy has been recognized as a key skill that leads to healthy financial behavior in recent years. The complicated products of the modern world’s market has made the need for financial literacy inevitable. Considering the spending habit of people and the desire to have every material thing, it is imperative to inculcate financial literacy among people. Financial literacy prepares consumers for tough financial times especially after retirement through strategies that lessens risk such as accumulating savings, diversifying assets, make strategic investment decisions and purchasing insurance.U.S. Financial Literacy and Education Commission (2007) defines financial literacy as the capacity to apply ideas and skills to effectively manage financial resources in order to achieve a long lasting financial soundness. Being financially literate helps the individual to avoid as well as solve personal financial challenges and also live a healthy, happy and prosperous life. (Kinnunen and Pulkkinen, 1998; Yeung and Hofferth, 1998; Cleek and Pearson, 1985) argued that financial problems results in social problems such as divorces, mental illnesses, prostitution, suicide and a variety of other undesirable social experiences. As a result financial literacy has gained the attention of many countries, consumers and other stakeholders such as World Bank, financial institutions and other government agencies.Financial  literacy  equips individuals with  the  necessary  knowledge,  ability  and tools  to  make informed financial decisions with confidence, to manage personal  wealth with high degree of competency and heighten the efficiency  in the  demand for  best  financial  products (Ali,  2013). It also reflects competency in actively managing one’s own money from the point of accumulation to the point of consumption (Remund, 2010). Financial literacy can therefore can help older workers ensure that they have enough savings for a comfortable retirement by providing them with the information and skills to make wise investment choices with both their pension plans and any individual savings plans.Retirement on the other hand, is a point in an employee’s life when he/she is expected to disengage from service. That is it is basically disengagement from active service or work. Although many workers see it to be unpleasant, it is one thing which is inevitable. That is workers will face any forms of these retirement: partial retirement, voluntary retirement, social security, perceived retirement and early retirement (Meatus, 2009).  The retirement age in countries usually differ. In Ghana the mandatory retirement age is 60 years whilst in Nigeria it ranges from 60, 65 to 70 depending on the institution. Retirement is usually seen as just withdrawal from ones occupation or active working life but evidence shows that that it is a more complex and progressive transition (Pinquart & Schindler, 2007; Wang, 2007) which requires adequate planning. This adequate planning is what is termed as retirement planning. It is the process of understanding how much it costs to live on retirement and coming up with a plan to organize assets to meet any income shortfall. Methods for retirement plan include taking advantage of government allowed structures to manage tax liability including: individual structures, or employer sponsored retirement plans (FPSB, 2011; Mandell and Klein, 2009). Preparation to retirement is very crucial to the life of every worker who would want to retire successfully and achieve financial independence. But as a result of financial illiteracy most workers are unable to plan well for their retirement and end up destitute. Globally, governments are encouraging their citizens to take and accept more responsibility for their retirement incomes and to move away from public pensions (Beal and Delpachitra, 2003). In the effort of the Government of Ghana to provide financial security to the average worker during retirement has impl

Categories: Investment


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