Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



How well older households manage their wealth holdings is an important determinant of their financial security during retirement, yet little is known about their financial decision-making and how this relates to their financial literacy. Our paper fills this gap by measuring financial literacy among older persons in the Singapore Life Panel and examining its association with timely credit card debt repayment, stock market participation, and age-based investment risk diversification. Most older respondents understand interest compounding and inflation, but fewer than half know about risk diversification. Almost all older credit card holders pay off their balances in a timely manner, but only 40% hold stocks; fewer than 18% with $1,000+ in assets hold portfolios consistent with age-appropriate investment glide paths. We further show that a one-unit higher financial literacy score is associated with a greater propensity to timely pay off credit card balances (1.5 ppts), to hold stock (8.3 ppts), and to follow an age-appropriate investment glide path (1.7 ppts).


Retirement, financial literacy, credit card debt, stock market participation, life-cycle investment, household portfolio, risk diversification

JEL Code

D14, E21, G5, G11, J32

Working Paper Number


Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. © 2020 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


We are grateful to seminar participants at the 2019 Asia Pacific Financial Education Institute Conference and the 2019 Asia Pacific Risk and Insurance Association Meeting for helpful comments. We also thank Yong Yu, the Singapore Life Panel (SLP®) team, and the RAND SLP® team for excellent research assistance. This work was supported by the Singapore Ministry of Education (MOE) Academic Research Fund Tier 3 Grant at the Singapore Management University (grant number MOE2013-T3-1-009); the MOE Start-up Grant at the National University of Singapore (grant number R603-000-267-133); and the Pension Research Council/Boettner Center at The Wharton School of the University of Pennsylvania.

Included in

Economics Commons



Date Posted: 12 October 2020