Financial Confidence

by: CLHIA Staff

In 2016, the National Steering Committee for Financial Literacy established a Research Sub-Committee to provide it, and the Financial Literacy Leader, expert advice based on robust empirical evidence. This past April, the Sub-Committee issued its progress report on the major themes and emerging trends from studies contributing to the delivery of the National Strategy for Financial Literacy. One such study examined the impact of an increase in financial literacy on financial well-being among retirees and near-retirees. Its aim was to identify the unique contributions of knowledge, skills and confidence on retirement well-being in Canada.

It found that the two most important elements of financial literacy were financial confidence and making use of advice on financial products. The overall results suggested retirees and near-retirees may benefit from experiential learning approaches intended to increase financial confidence as well as from using the skills related to making use of advice on the products that help them reach their financial goals. If retirees felt knowledgeable and capable of managing their personal finances, they were more likely to report having a better standard of living. Similarly, near-retirees with higher levels of financial confidence were also more likely to exhibit better indicators of financial well-being.

The findings indicated that, regardless of a consumer’s specific demographic situation (ie, age, gender, marital status, income and education), increasing financial confidence and making use of advice on financial products are both predicted to improve the likelihood of positive outcomes in terms of retirement living standards and retirement planning. Similarly, having more financial knowledge and sticking to a budget both promote retirement planning among near-retirees.