Saving for retirement with Crypto: it’s a good idea. Be informed first

VSCryptocurrencies and digital assets have quickly become part of our new normal. With a majority of Americans set to retire soon, many are rethinking their investment strategies, looking instead to invest in crypto to make up for lost time.

Although crypto has remained a lucrative investment for some, it remains a highly volatile and risky investment. Betting your retirement savings on a digital currency can result in significant losses, while at the same time, experts say diversifying your retirement portfolio helps improve financial security for your future.

As the world has entered a craze for Bitcoin and other popular digital coins, millions of soon-to-be-retired Americans are looking to see if the highly volatile crypto market can perhaps give them the boost financial support they might need.

But it’s no wonder that, according to the latest information, about 1 in 10 American internet users currently own some kind of digital currency.

Yes, it can be argued that crypto has made a lot of people extremely rich, but in return, you should also consider at what risk? You may have heard how millions of people have increased their wealth almost overnight as the prices of various digital coins have skyrocketed. As quickly as they increased their wealth, they also managed to lose it.

The main thing here is, crypto remains a gambleand you have to be smart about your investment.

Considerations to keep in mind

Crypto for retirement is gaining popularity

In a recent survey published by Capitalize, 20% of the 1,004 US employees surveyed who are soon to retire are currently investing in some form of digital assets. On the other hand, 63% of Gen Xers and larger Baby Boomers believe that investing in digital assets such as crypto, among others, could result in significant losses.

While these two groups make up the majority of the soon-to-retire American workforce, the situation is somewhat different for younger workers.

The same survey indicates that around 56% of Gen Z workers already include some form of crypto in their retirement strategy, while 54% of millennials do the same.

It is estimated that to retire comfortably, Americans will need on average more than $1.8 million in retirement savings. But while some think that might not be enough to get them through their golden years; the sentiment around digital coins and crypto is a bit more bearish for older workers.

The world of crypto is still too little known for some

Although crypto has played a huge role in our society in a short time, a portion of the American population still does not know what crypto is, how it works, and how to invest in it.

Older investors, between the ages of 55 and 64, make up 11% of current crypto investors according to a survey by CNBC Select and Dynata. On the other hand, individuals between the ages of 18 and 34 account for almost half of current crypto buyers, occupying 45% of the market, while those between the ages of 35 and 44 come in second with 37%.

Crypto can be a big deal for those who are still open to taking the risk, but for older generations crypto remains just a fad or even an unknown market they don’t want to enter.

Security risks

What has attracted so many investors and buyers is the simple understanding that cryptocurrencies are decentralized and deregulated. This is excellent news for investors who wish to benefit from a high level of anonymity and security.

On the other hand, the security of the crypto community remains a contributing factor in ensuring the safeguarding and preservation of individuals’ digital assets.

There have been too many instances in recent years where crypto security has failed to protect user assets. From hacked digital wallets to businesses that go bankrupt and lose millions of Bitcoins, and even software infections that led to a major data breach.

After buying your crypto, you always run the risk of losing it, not to a volatile market, but to unforeseen circumstances related to security issues.

And although you’ve spent a large chunk of your retirement savings investing in crypto, you can almost instantly lose your assets without you even knowing it.

Bitcoin IRA

Individual Retirement Accounts or IRAs are an encouraging retirement savings plan for those looking to save for their after-work endeavors. Some banks and other major financial institutions are now offering soon-to-retire workers the option of investing in cryptocurrency through an IRA.

The introduction of Bitcoin IRA makes it easier and a bit more secure for small investors to get a piece of the crypto pie. According to the results, since March 2020, more than $400 million in retirement investments have already been processed.

401(k) versus Bitcoin IRA

Experts suggest that employees match the amount their employers contribute to their 401(k) plan. This means that employees must first match what their employers are contributing before making any further purchases or investments in retirement plans or schemes such as Bitcoin IRA.

If an employee has the option to add to their 401(k) or 403(b) plan before investing in Bitcoin IRA, contributions and the overall retirement portfolio should remain diversified, leaning more towards funds and plans low-risk retirement.

But while a 401(k) is an attractive benefit for employees, many still share that Social Security alone won’t be enough to sustain them in the near future. While this may be true, investors are instead encouraged to include cryptocurrency and other digital assets in their long-term investment plan.

Alternative options

Although it may seem like cryptocurrency can give you a high return on investment, there are some alternative options that could help you build your retirement fund.

Consider long term

Most crypto investors are young, tech-savvy traders who are willing to take the risk when investing in such a volatile market. Investing in crypto can cost you a lot of money, so before you spend a lot of your retirement savings, consider diversifying into other securities first.

With that in mind, remember that in today’s age, when you may be trying to make up for lost time, cryptos are still a long-term investment. Think of it like a house, when you first bought it it cost you a ton of money, but over time as you pay off the mortgage you realize the true value it is holds. Crypto works the same way.

Less risky investments

Regardless of your age, there are lower-risk investments that can help diversify your portfolio. You may want to consider a mutual fund which may be able to help you increase your annual interest as your investment grows.

Stocks and government bonds are still a stronghold in the current economic environment and can be very beneficial. Savvy investors can decide if they want to go about it themselves, which may require additional knowledge or skills. Or just use a broker who might charge commission fees, but at least your investments will be safe.

Roth IRA

It is one of the most traditional retirement plans used by millions of Americans. For those who might find themselves in a situation where your employer or company offers no retirement benefits, you can open a tax-efficient Roth IRA plan.

The IRA options are endless and you can find them at various banks, financial companies, or investment brokers. This gives you a little more control over your retirement investments and you can take advantage of the tax benefits that automatically come with it.


Whether you’re trying to catch up, jump into the crypto craze, or really want to get into the market, digital assets are high-risk and extremely volatile investments when you add them to your retirement portfolio. .

It’s always a good idea to diversify your portfolio across a variety of stocks, but think about picking ones you can control and understand how it works.

We still have a lot to learn and understand about how crypto works, and in an economic environment where novice traders are flooding the market and pinching the price of crypto, perhaps this is something that should remain a percentage. marginal of your retirement portfolio, for now at least.

By Pierre Raymond for

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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