The Influence of Financial Literacy and Risk Tolerance on Retirement Financial Planning

Purpose: This study investigates the impact of financial literacy and risk tolerance on retirement financial planning among millennials, with financial behavior as an intervening variable. The research seeks to enhance understanding of factors affecting millennials' preparedness for retirement. Design/methodology/approach: A quantitative research approach was utilized, with data collected from 122 re-spondents in Denpasar City. The study employed a structured questionnaire to assess the variables and analyzed the data using Structural Equation Modeling (SEM) with Smart-PLS 4.0 software. Financial literacy, risk tolerance, financial behavior, and retirement financial planning were key variables measured. Findings: The study reveals that financial literacy positively influences financial behavior but does not directly affect retirement financial planning. Risk tolerance has a significant impact on both financial behavior and retirement planning. Furthermore, financial behavior fully mediates the relationship between financial literacy and retirement planning and partially mediates the influence of risk tolerance on retirement planning. Research limitations/implications: The study's reliance on voluntary sampling may limit the generalizability of findings. Future research should consider broader sampling methods and investigate additional factors, such as income and gender, that may shape retirement planning behaviors. Originality/value: The study contributes to the literature on retirement financial planning for millennials by in-troducing financial behavior as an intervening variable. It provides insights into the importance of financial literacy and risk tolerance in shaping retirement planning decisions, specifically in the context of Indonesia's millennial population.