The Relationship Between Retirement Planning and Financial Literacy in Russia

The research paper explores the question on the relationship between financial literacy and retirement planning in the Russian Federation from 2014 to 2016. Using the “Financial behavior of population of the Russian Federation” survey, it shows that in Russia people do not plan for the retirement a lot, what makes them insecure on the edge of reaching the retirement age. This paper indicates the solution for this problem. It is to increase the level of the financial literacy of the individual. The model estimated by probit-regression shows that having the basic financial arithmetic skills increases the probability of having the long-run financial aim to plan for the retirement and following the strategy in order to achieve this aim. The output of the regressions coincide with the results of previous researches. Moreover, this paper shows that particularly for the Russian Federation trust is considered to be the important factor, which influences the pension planning. Overall, the results can be regarded as the signal for the government or other organizations that there is a need of special financial literacy programs for Russian citizens. In addition, the research paper defines the groups of people, which the financial literacy programs must target. The work also faces the problem of endogeneity and solves it by using the instrumental variable: frequency of the internet usage.