Economics, Business and Management: Recent Advances Vol. 5

Retirement preparedness has become more dependent on individual decisions in pension systems where contribution choices, investment allocation, withdrawals and the management of longevity risk are increasingly consequential. Financial literacy is frequently proposed as a remedy, yet the literature does not establish that improving general financial knowledge necessarily produces sufficient retirement income. This critical narrative review examines the relationship between financial literacy and retirement preparedness, distinguishing knowledge from confidence, planning from execution, and accumulated assets from sustainable retirement resources. Peer-reviewed research and selected methodological and institutional evidence published from 2000 to 24 August 2026 were examined using a transparent, concept-led literature selection process. The synthesis brings together cross-country observational studies, longitudinal analyses, structural models, experimental evaluations and recent work on pension-specific and digital financial literacy. The most consistent finding is a positive association between financial knowledge and reported retirement planning, although estimates are sensitive to measurement, socioeconomic selection, pension institutions and identification strategies. Evidence that pension-specific knowledge predicts actual programme participation raises doubts about the adequacy of generic literacy measures. Experimental findings show that targeted information and decision architecture can change immediate saving behaviour, but impacts on sustained contributions and retirement income are less secure. Gender, employment informality, income volatility and digital exclusion constrain both opportunities to learn and the feasibility of acting on knowledge. The review proposes an outcome hierarchy separating understanding, planning, implementation and retirement adequacy, and identifies research designs capable of testing movement across these stages. Financial literacy is best understood as a potentially useful, context-dependent component of preparedness rather than a substitute for reliable pension coverage, adequate earnings or effective institutional design.