Impacts of Financial Knowledge and Health on Household Savings Behavior:

The increasing longevity of individuals, coupled with rising financial uncertainty, underscores the critical need for adequate household savings. Despite the importance of financial preparedness, nearly 50% of U.S. households nearing retirement (ages 55-64) lack sufficient savings (U.S. Federal Reserve, 2023). This study examines the relationship between life cycle variables, including expected longevity, financial knowledge, and health-related factors in shaping household savings. Using data from the 2022 Survey of Consumer Finances, we employ binary logistic regression to examine factors associated with household saving behavior. The Life Cycle Hypothesis (Ando & Modigliani, 1963) provides the theoretical foundation, extended to incorporate expected lifespan, financial knowledge and health related factors as key predictors. Findings reveal that households with high subjective financial knowledge have 71% higher odds of saving, while smokers have 30% lower odds of saving. Additionally, socioeconomic disparities were found to be significant, with single females and Hispanic households exhibiting lower savings rates compared to their counterparts. These findings underscore the need for targeted programs and policies that enhance financial literacy and health, promoting long-term saving habits and healthy lifestyles, particularly among vulnerable demographic groups. The study contributes to personal finance by integrating cognitive, health, and demographic influences into household saving decisions.