Research On The Impact Of Financial Literacy On Family Endowment Asset Allocation

Reform and opening up and low-cost labor supply have created the miracle of China’s economic growth and driven the rapid development of society in recent decades.As China enters an era of economic transition and accelerated aging,characteristics such as a supersized elderly population and an increased burden on pensions will become important national conditions for China in the longer term.At the same time,the income of the basic pension fund suffers from the impact of the slowdown of economic growth.The current social reality that China ages before it gets rich and the weak protection capacity of the pension fund have seriously affected the economic security of residents after retirement.Residents should take the initiative in asset allocation,save for a rainy day during the labor stage,and choose an appropriate pension asset allocation method based on consideration of their personal wealth status and retirement needs,a requirement that presupposes that residents have an adequate level of financial literacy.However,according to the survey “Consumer Financial Literacy Survey and Analysis Report(2021)”,although the level of consumer financial literacy in China is in a continuous process of rising,there is still a large gap compared to the level of financial literacy of residents in developed countries.Therefore,it is urgent to improve residents’ awareness of diversifying their retirement asset allocation and actively planning for their retirement.Based on the life cycle theory hypothesis,behavioral finance,investment portfolio theory and efficient market hypothesis,this paper continues to study and analyze the household retirement asset allocation situation affecting Chinese residents.Based on the existing domestic and foreign literature,the connotation of pension finance and the multiple forms of pension financial assets are clarified.Based on the behavior and psychology of retirement decision making,we analyze the factors affecting household retirement asset allocation at both social and individual levels,and clarify the three paths of the role of consumer financial literacy level on retirement planning: income mechanism,financial attitude and financial decision-making ability.According to the “China Consumer Financial Literacy Survey and Analysis Report(2021)”,the financial literacy index of Chinese residents is 0.6681,and this paper constructs a three-stage overlapping generations model,i.e.,adolescence,adulthood and old age,and uses a single sector,i.e.,the household sector,as the research object to solve for the optimal personal consumption decision results including risky assets,commercial insurance and education investment,and numerical simulation analysis The main influencing factors of household retirement asset allocation,as well as the influence of commercial insurance price,pension insurance replacement rate,and basic pension insurance contribution ratio on household commercial pension insurance purchase are studied.It is found that the increase of people’s financial literacy level leads to an upward trend of people’s purchase of commercial pension insurance.From the perspective of income mechanism,the higher the level of financial literacy,the higher people’s income level,the larger the scale of wealth that can be invested and saved after making current consumption,the more diversified investment space and products they can choose,and the greater the motivation to carry out pension asset planning.From the perspective of residents’ financial attitudes,the higher the level of financial literacy,the greater tolerance for risk,the higher the cognitive ability and attention to financial market information,and the greater the possibility of investing more funds for the purchase of risky assets and commercial insurance.From the perspective of financial decision-making ability,the improvement of financial literacy level helps residents to identify information in the financial market,clarify the coexistence of risks and benefits,and make reasonable financial decisions.At the same time,the high level of basic pension insurance in China will reduce people’s motivation to actively plan their pension assets,which is not conducive to building a perfect financial market and protecting people’s standard of living in old age.Thus,we should take corresponding measures to cope with the problem of aging before the rich caused by the trend of population aging.In the government dimension,the state should establish a system of financial literacy education and popularization,comprehensively improve the level of financial literacy of residents,continue to consolidate the fight against poverty,narrow the income gap between urban and rural areas,introduce policies to promote the development of the pension financial market,and strengthen the supervisory power of the government pension financial market;in the financial institution dimension,commercial pension financial institutions continue to deepen reform,innovate financial products,innovate business forms and improve service efficiency;in the personal dimension of residents,decision makers should take the initiative to learn financial knowledge,establish correct risk concepts,strengthen financial skills exercise,and financial decisions should be within their own risk tolerance.