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Using microdata from China Family Panel Studies (CFPS), this article studies the financial literacy of retired Chinese residents and their asset allocation. This study found that despite numerous related economic decisions made over their lifetimes, the financial literacy of retired Chinese residents is still at a very low level. No matter whether in urban or rural, a large proportion of retired residents are financially illiterate. At the same time, the financial literacy level has a significant impact on the asset allocation of retired residents, and retired residents with low financial literacy levels have a low degree of diversification in asset allocation. Considering that China's average life expectancy has reached 77 years, retired residents will face various financial decisions for a long time to come, relevant policies should be devoted to improving the financial literacy of retired residents, which will help improve their economic and financial safety and enhance their financial welfare. [ABSTRACT FROM AUTHOR] more...