Empowering Indonesian Millennials: The Role of Financial Literacy, Goal Clarity, and Risk Tolerance in Retirement Savings

ALFANDO, KEFAS and Anastasia, Njo and Yuliana, Oviliani Yenty (2025) Empowering Indonesian Millennials: The Role of Financial Literacy, Goal Clarity, and Risk Tolerance in Retirement Savings. [UNSPECIFIED]

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Abstract

The millennial generation in Indonesia may struggle with retirement if they do not begin preparing their retirement funds early. This study aims to explore the impact of financial literacy, retirement goal clarity, and financial risk tolerance on the retirement saving behavior of millennials. Data was collected through an online questionnaire using purposive sampling targeting employed Indonesian millennials, resulting in 212 respondents. Hypothesis testing was conducted using partial least square-structural equation modeling with the Smart-PLS 4.0 software. The results of this study reveal that subjective financial literacy significantly influences retirement saving behavior, both directly and through the partial mediation of retirement goal clarity. In contrast, objective financial literacy and financial risk tolerance do not exhibit a significant influence on retirement saving behavior. The findings underscore the importance of boosting confidence in financial knowledge and the clarity of retirement goals to encourage better saving habits among millennials. Setting clear retirement goals is crucial for driving saving behavior, even when potential risks are factored in. Millennials are approaching retirement age, making it essential to assess their readiness and preparedness for retirement.

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