Financial Capability and Financial Planning at the Verge of Retirement Age

Financial capability is an important public policy concern, particularly as it relates to retirement preparedness. Almost one-third of older adults in the United States, those over the age of 55, have neither retirement savings nor accumulated pension benefits. Focusing on low-income adults who are nearing retirement, we explore the relationship between financial-planning behaviors (paying bills on time, emergency savings, and retirement planning) and two key components of financial capability, financial education and financial inclusion. Using data from the 2015 National Financial Capability Study, the results point to the role of financial inclusion for financial-planning behaviors. Having access to mainstream financial services was more strongly associated with the three financial-planning behaviors than was participating in financial education in the workplace. These results for low-income older adults held for the middle-income groups but were weaker for higher-income households. The results highlight efforts targeting financial inclusion for the financial planning of low-income older adults nearing retirement age. Policy implications include suggestions for interventions to facilitate financial inclusion for those nearing retirement age.