THE EFFECTS OF FINANCIAL LITERACY ON RETIREMENT PLANNING OF GOVERNMENT EMPLOYEES IN TANZANIA: MODERATING EFFECT OF FINANCIAL DECISION BEHAVIOUR

Abstract

This study investigated the influence of financial literacy on retirement planning of

government employees in Tanzania: moderating effect of financial decision- behavior. Grounded in the theories of Expected Utility and Planned Behavior, the

research adopted a positivist paradigm, a deductive approach, and a cross-sectional survey design. Data were collected from 408 employees across 24 ministries and analyzed descriptively using IBM SPSS 25 and inferential analysis via PLS-SEM. Results indicated that computation capability and risk attitude toward financial products significantly and positively affected retirement planning, whereas financial knowledge and education showed no significant impact. A theoretical contribution from the finding is that financial decision-behavior fully moderated the relationship between risk attitude and retirement planning. This outcome reinforces critiques from behavioral finance by challenging the rational premises of Expected Utility Theory and highlighting the critical role of behavioral factors. The study concludes that effective retirement planning is primarily driven by practical computation skills and risk attitudes, rather than by general financial knowledge or education. The full moderating effect of financial decision-behavior represents a pivotal insight, emphasizing the paramount importance of psychological and behavioral dimensions in financial planning. Consequently, policymakers and pension providers are urged to design targeted financial retirement training programs that focus on practical skills and the necessity of sufficient long-term savings. Future research is recommended to apply this validated model in different contexts to assess its generalizability.