The Croatian pension system is exposed to various challenges, which is why topics such as financial and pension literacy and the possession of financial knowledge and skills become very important for an individual's life. Greater complexity and more difficult sustainability of the pension system leads to dissatisfaction of individuals with pensions, to large contributions and low incomes, to insecurity in retirement and to many problems felt by all residents regardless of age. Precisely because of all the challenges and limitations facing the pension system, it is extremely important to educate people about pensions and savings for the retirement. The pension system of the Republic of Croatia is known for many reforms and its long-term sustainability is considered questionable, therefore encouraging and developing pension literacy and pension savings is one of the possible solutions to ensure a better quality of life in retirement. Pension literacy helps educate citizens about the importance of saving for retirement and thus encourages individual responsibility for planning retirement funds. The aim of this paper is to describe the basic concepts related to pension literacy and pension savings, and thus to point out the importance of retirement planning, and thus encouraging education about how to invest, save, and what are the consequences of insufficient pension literacy, which affect the individual, but also on the system as a whole.