Financial literacy and retirement planning in Mexico

Abstract

According to the Mexican National Survey of Financial Inclusion 2021, Mexicans’ behavior regarding retirement savings is of great concern because only one-third of the Mexican population saves for their retirement. This study measures the financial literacy level among Mexicans and determines its relationship with retirement planning and socio-demographic variables. A multinomial logit micro-econometric model was estimated and data from the last Mexican National Survey of Financial Inclusion 2021 were used. The results indicate that women, rural residents, poorly educated people, and low-income earners are more likely not to plan for old age. Furthermore, financial literacy positively influences the decision to formally plan for retirement. The findings may be useful in designing strategies to increase Mexicans’ financial literacy levels and, consequently, their planning for retirement.