Rethinking Retirement Investment With Crypto

Cryptocurrencies are a growing part of retirement investment strategies for people of all ages and demographics. It is estimated that the average amount of money needed to retire comfortably is $1.8 million. The average amount of money being saved for retirement is $448 per month. This leaves quite a shortfall—people investing in crypto hope that this will help to close the gap.

According to a survey by Capitalize, a well-known retirement consultancy firm, more than a third of US workers are holding some kind of cryptocurrency in order to fund their retirement. 55% of millennials and Gen Zers have crypto investments as part of their strategy for retirement. Around 20% of baby boomers and Gen Xers have some crypto investments for their retirement.

Betting On Crypto

Past performance can never be a sure sign of future success. However, Bitcoin has been called the investment of the century. It has produced on average 200% returns per year for the last ten years. This means that Bitcoin’s performance beats the next closest asset by ten times.

Younger investors are the most willing to bet on these results. More than half of millennials and Gen Zers who were surveyed are including crypto in their retirement portfolio. As they have a longer period of time before retirement, this younger demographic feels they can take more risks.

Working Into Retirement

For many decades the standard age of retirement was 65. Research has found that people are now working for longer and that this is associated with multiple health benefits. One third of younger people surveyed said that they expect to start their own business or work for an employer once they reach the traditional retirement age.

30% of younger people surveyed said they want to volunteer after retirement. The same amount said they would still like to work part-time. A third of millennials and Gen Zers said they plan to work full-time after retirement. There is a commonly held belief that social security benefits will not be enough to support people into old age.

It is not clear whether these plans for working longer are primarily for financial security or for lifestyle reasons and to avoid boredom.

The New Normal

Cryptocurrencies have installed themselves into our daily landscape as part of the new normal. As people reach close to retirement age, they may radically reconsider their investment strategies. They may see investing in crypto as a way to make up for lost time.

As we all know, the crypto market is highly volatile. This is what allows for big gains to be made. It can also lead to catastrophic losses. This volatility will probably remain until crypto really hits mainstream adoption and becomes more regulated. This will lead to a more stable market.

Smart Investing

Like all investments, crypto comes with an element of risk. It is always smart to diversify your portfolio. This could mean buying a mixture of stocks and bonds, cryptocurrencies, precious metals, real estate, and leaving some money in a high-interest savings account.

Blockchain technology has had a huge impact on our world in a very short space of time. However, a sizable number of people still have no idea what cryptocurrencies are, how to invest in them, or how they work. This can make the uptake much slower.

Generational Investing

A recent survey by CNBC Select and Dynata showed that older investors account for 11% of the total crypto investors. People aged between 18 to 34 account for 45% of the market. People aged 35 to 44 account for 37% of the crypto market.

This shows that crypto is a young person's game. Younger generations may be able to see the world-changing potential of blockchain technology. As cryptocurrencies are decentralized, using them as our main form of currency potentially means that we no longer need central banks or hierarchical structures. The transparency of the blockchain also makes money laundering much more difficult.

For older generations, cryptocurrency may seem like a passing fad or something threatening and unknown for older generations.

Crypto IRA

IRA’s are Individual Retirement Accounts. Some banks now offer the opportunity to invest in cryptocurrencies through a crypto IRA. This can help to simplify the process of acquiring cryptocurrencies massively. It allows small-time investors to grab a piece of the crypto pie without having to learn lots of technical computer knowledge.

Thinking Long-Term

The majority of people currently investing in crypto are young and tech-savvy. You need a high tolerance to risk when investing in a market that can be so volatile. As well as the potential for big gains, you can also make big losses. It’s always smart to diversify your investments.

Remember that cryptocurrencies are a long-term investment. If you want to be a day trader and make quick gains, this is a whole different ballpark. If you want to invest in some of the layer one protocols, such as Ethereum, Polkadot, and Cardano, then it’s a matter of holding and waiting for the market to rise as these blockchain technologies gain more and more real-world value.

Diversify Your Portfolio

Whatever your age, you may want to consider investing in a range of assets. Stocks and bonds have been a stronghold of the economy for hundreds of years. You can do your own research, or you can hire a broker to invest in the stock market for you.

Real estate is a real-world asset that can be leased out or sold at a profit. Gold has held its value since the time of the Romans and is a good store of value. Your workplace may also offer a 401(k) plan. This means that they will match all of the contributions that you make to your own retirement fund up to a certain amount.

In Summary

You may be trying to make up for lost time and going all out with the world of crypto or just dabbling in the market. Remember that digital assets are high-risk and have the potential for both big losses and big gains. Make sure you do plenty of research before buying cryptocurrencies.

Even if you make a tiny percentage of your retirement portfolio crypto-based, you will be entering this brave new economic world.

Author bio

Hey, I’m Ellie. I’m a writer and personal finance blogger living in Davis, CA. https://about.me/ellielott