Is Social Media the New Retirement Advisor? Assessing the Impact of Social Media Influence on Retirement Planning

Abstract

This study investigates the impact of social media adoption on individual retirement planning, as indicated by borrowing from retirement accounts. Utilizing the latest 2021 cohort of the National Financial Capability Study, we find that greater reliance on social media is associated with a significantly higher likelihood of retirement borrowing, which may lead to long-term financial instability. A follow-up causal analysis using the propensity score matching (PSM) and instrumental variable (IV) design confirms this positive relationship. Moreover, we find that job loss positively moderates the relationship between social media reliance and retirement borrowing. While the traditional framework of information asymmetry suggests that increased transparency and accessibility benefit individuals, our findings highlight the need to consider the complexity of information processing in the era of big data, which requires greater financial knowledge and literacy. Additionally, our results underscore the critical role of financial education in effectively processing the complex information available on social media, particularly during market stress.