This paper documents the early-source determinants of retirement planning and financial literacy in China. Taking the 1959–1961 China Famine as a natural experiment, it compares the probability of retirement planning and the level of finance literacy in 2014 for the famine-affected cohorts (1953–1961) with those non-affected cohorts (1962–1963) born in provinces with varying famine severity. Taking advantage of a newly added module in 2014 China Family Panel Studies to construct a measure of financial literacy, this paper finds that nutritional deprivation in utero and during early childhood negatively affects financial literacy in older age. As a result of lower financial literacy, these individuals also report lower likelihoods of retirement planning. Further investigations suggest that impairments of cognitive ability are a likely channel through which famine impacts financial literacy and retirement planning, consistent with the notion that the cost of developing a retirement savings plan is higher for cognitively disadvantaged individuals.
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