Should Clients Use Crypto To Catch Up on Retirement Savings? 

Better late than never, right? 

Three-quarters of retirees surveyed by the Transamerica Institute regret not saving earlier in their lives and wish they had saved more after they eventually got started. It’s no wonder, then, that many are seeking new potential sources of wealth creation ahead of retirement. For an increasing number of people, cryptocurrencies fit the bill. 

“We’re seeing significant interest among people aged 45+ looking into crypto investments,” said Ryan Horst, CEO and co-founder of the cryptocurrency investor education service Altcoin Pro. “Many of them have significant wealth and a lot to lose, so it’s really important that they know what they’re doing.”

Financial advisors told Retirement Upside that trying to “catch up” with crypto has some merit, but most voiced significant caution about the risks involved. When evaluating the inclusion of digital assets like bitcoin in a client’s portfolio, the decision depends on the specific client, their goals and their risk tolerance. There is no perfect asset or allocation, advisors agreed, and not everyone is suited to be a crypto investor. 

Crypto Cautious  

“I’ve seen more clients over 45 interested in crypto, especially those who feel behind on retirement,” said Joon Um, tax advisor at Secure Tax & Accounting. “The danger is treating it as a shortcut to catch up. Crypto can offer growth, but it is highly volatile. I would keep it as a small, speculative part of a diversified retirement plan.”

Kevin Feig, founder of Walk You To Wealth and former head of risk at the crypto exchanges Coinbase and Kraken, agreed. “While there are a lot of digital assets available, most are simply noise,” he warned. “They aren’t one-size-fits-all, and most have drastically different use cases and profiles.”

Bitcoin and ether, for example, are often linked in news articles because they are the largest by market cap, but they have very different characteristics: 

• Bitcoin, for example, is best explained to clients as a collectible: If there’s no demand, there’s no value. 
• Ethereum, on the other hand, is essentially a tech platform that enables fast, low-cost transactions via decentralized financial systems.

“You want to understand why you are holding any digital asset and how it fits into your overall portfolio,” Feig said. 

Crypto Skeptical. Not everyone is open to using crypto in retirement portfolios. Monica Dwyer at Harvest Financial Advisors thinks it’s a “very bad idea.”

“You think that if you just put your money into this risky asset that you can cross your fingers and hope that it provides you the retirement lifestyle that you dream of but haven’t been able to save for,” Dwyer said. “Don’t invest in risky assets just because you didn’t save enough yet. Buckle down, reassess your ability to spend less and save more. The real magic happens when you change your lifestyle and assess what is truly important.”