The Impact of Financial Literacy on Financial Preparedness for Retirement in the Small and Medium Enterprises Sector in Uganda

Abstract

In social economic contexts characterized by young populations largely employed in the small and medium enterprise informal sector, retirement preparedness is an individual responsibility. This chapter explores the effects of age and financial literacy (knowledge, skills, attitudes, and behaviors) on retirement preparedness (RP). Primary data collected from a sample of n = 380 small and medium enterprise (SME) workers in Uganda is analyzed using SPSS. Measurement items are tested for validity and reliability to yield satisfactory composite reliability scores and average variance explained (AVE). Structural equation modelling (SEM) is used to test the hypotheses. The results reveal that specific behaviors, knowledge, and skills, but not attitudes, are significant predictors of RP. Also, that age does not significantly moderate the relationship between financial literacy and retirement preparedness. The chapter outlines practical implications for policymakers and financial educators in a developing country context.