Retirement Preparation of Self-employed Workers in Ghana. Does Financial Literacy, Financial Inclusion and Household Income Levels Matter?

Abstract

Abstract Retirement preparation determinants have been a topic of discussion among governments, policy makers and researchers for some years now. Financial Literacy has been established as an important determinant of retirement preparation, yet little is known about how financial literacy influences the retirement preparation among self-employed workers. Our study fills the gap by assessing the relationship between financial literacy, financial inclusion and retirement preparation of self-employed workers in Ghana with household income levels serving as a mediating variable. The study adopted purposive and convenient sampling techniques to distribute 600 questionnaires among the self-employed workers in the Kumasi Metropolis in the Ashanti Region of Ghana. Using a structural equation modelling method, the results of the study showed that that financial literacy has a positive significant relationship with retirement preparation. Additionally, the study also revealed household income level mediates the relationship between financial literacy and retirement preparation as well as the relationship between financial inclusion and retirement preparation of self-employed workers in Ghana. Based on the findings of the study, it is recommended that policymakers, financial institutions, and non-government organizations should formulate financial education initiatives specifically tailored for self-employed workers that will enhance their financial literacy levels and also increase their income levels.