Abstract
We investigate the relationship between financial literacy, debt anxiety, risk tolerance, and subsequent resource allocation decisions for cohorts of retirees. Using a survey and the novel comparative method of Multi-Criteria Decision-Making Analysis we prioritise retirement allocation choices of older New Zealanders. Retirees display high financial literacy and together with debt anxiety this is significantly correlated with resource allocation preferences. Financial literacy reduces debt anxiety in men, increases the risk tolerance of women and is associated with a higher preference for KiwiSaver. Greater debt anxiety is associated with debt repayment, and debt avoidance in old age is critical to long-term wellbeing.
•Use multi-criteria decision-making to prioritise retirement spending preferences.•Retiree spending is related to financial literacy, debt anxiety and risk tolerance.•Financial literacy is associated with higher income and education.•Lower financial literacy is associated with more debt anxiety.•Higher debt anxiety triggers debt reduction rather than retirement saving.