Evaluation of the Reliability and Validity of the Retirement Knowledge Scale (RKS)

The Retirement Knowledge Scale (RKS) consists of 10 questions that assess three aspects of financial planning for retirement: reflection about retirement plans, engagement with information on retirement preparedness, and evaluation of retirement preparedness. The RKS was administered to 1350 adults 50 and older in the Health and Retirement Study (HRS) as an experimental module for the 2020 wave along with the "Big Three" questions of financial literacy that assess knowledge about inflation, interest rate, and risk. Results of the study provide support for the reliability of the RKS scales in the full sample and separately for non-retired and retired adults. We also find support for the construct validity of the RKS based on its associations with the Financial Literacy Score (i.e. Big Three questions), retirement status, sociodemographic characteristics, financial outcomes and planning horizons, personality traits, and satisfaction with life and other related outcomes. We find that better RKS scores are correlated with higher objective financial knowledge and levels of education, being retired, better financial outcomes (value of financial assets, probability of leaving a 10,000 bequest, and IRA/Keogh, stock, checking and CD account balances), longer financial planning horizon, being extrovert, open and conscientious, and higher levels of satisfaction with life, income, personal financial situation, and health. We also conduct a multiple regression analysis that provides support for the validity of the RKS. The RKS is useful as it provides new information about knowledge gaps in financial planning for retirement.