North Korean defectors living in South Korea have rapidly increased from 1,990 in 2001 to 31,339 in 2017. However, at ages 65 and over, they are 12 times as likely to be live in poverty as their counterparts in South Korea. The purpose of this study is to analyze the factors influencing financial preparedness for retirement of the middle-aged North Korean defectors using concepts of ‘financial literacy’ and ‘financial inclusion’. Those questioned were 100 North Korean defectors selected by purposive sampling. Path analysis is used as a main analysis method. The results show a direct effect in which increased financial literacy resulted in better financial preparedness for retirement among middle-aged North Korean defectors at a statistically significant level. In addition, by boost-trapping method, financial inclusion has its mediating effect on the relationship between financial literacy and financial preparedness for retirement. However, this study demonstrate that influence of financial literacy on financial preparedness for retirement is different across income levels. The mediating effect of financial inclusion on the relationship between financial literacy and financial preparedness is statistically significant only for the low-income group. Meanwhile, for the above average income group, financial literacy has a direct effect on the financial preparedness after retirement at a statistically significant level. Based on these results, this study suggests practical and policy implementation such as necessity of customized financial education suited to their income levels, development of financial instruments for retirement, introduction of financial social workers to prepare stable old age of North Korean defectors.
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