Should Crypto Be a Part of Your Retirement Fund

With the rise of technology, we are moving towards a more digitalized world, and the ways in which we spend and invest money are also changing rapidly. Old approaches to investment have shifted today, and people are more keen on investing in their future in more practical places. One such avenue is digital money. This is where cryptocurrencies enter the picture. Cryptocurrency, or crypto, as it is simply referred to, is a form of currency that is available digitally and can be stored in digital wallets.

Cryptocurrencies have risen in massive popularity in recent years, and many consider them a good investment option for retirement. In fact, according to a survey, one-third of investors under 55 years of age plan on making cryptocurrency a part of their retirement fund.

However, it’s essential to understand the pros and cons of this decision, particularly considering the volatility of the crypto market. When we look into its past performance, crypto has been impressive, especially the leading coins, Bitcoin and Ethereum.

Having launched in 2009, Bitcoin is the first and most valuable cryptocurrency. To better understand, one only has to look into the data – if you had invested $100 in Bitcoin in July 2010, that money would now be worth about $50 million as of mid-2023. Ethereum was launched a bit later, in 2015, and its return over nine years is also massively impressive. At the same time, it’s important to note that these exceptional long-term performances were also coupled with severe volatility. Take a look at Bitcoin’s annual returns: its price increased 5500% in one year, while it dropped more than 80% in another year. Therefore, the longer you stay invested, the higher your chances of better returns.

Of course, past performances are not always indicative of future results. However, cryptocurrencies have consistently had excellent long-term returns despite price volatility. One must be well aware of the risks, volatility, and uncertainty of predicting the future of cryptos. If you plan on including cryptocurrencies in your retirement plans, keeping them as a smaller portion of your portfolio is wiser.

How Much Of Your Retirement Fund Should You Allocate To Cryptocurrencies?

How much crypto to include in your retirement fund will be based on the risk factors of crypto as well as your own risk tolerance. Given its high volatility, cryptos should ideally form a small portion of a diversified portfolio. A good starting point would be to allocate about 5-10% of your retirement portfolio to cryptocurrencies. Again, the exact allocation will depend on the investment horizon, goals, risk tolerance, and financial situation.

Remember, diversification is key – be sure to invest across multiple asset classes that include cash, gold, stocks, real estate, and bonds. Moreover, it would be best if you diversified within your crypto investments without putting everything on only one coin. There are thousands of cryptocurrencies out there, and for retirement purposes, well-established cryptos like Bitcoin and Ether are best.

Benefits of Making Cryptocurrencies Part of Your Retirement Fund

Offers Greater Potential For High Returns

Cryptos have a more significant potential for offering higher returns than traditional assets. However, this is based on past performances and might not always guarantee future returns.


Cryptos are an entirely new asset class, and it doesn’t move in alignment with traditional markets. Diversification across crypto assets can help in managing portfolio volatility and growth potential.

Inflation Hedge

Cryptos like Bitcoin serve as a hedge against inflation. However, it should be noted that the history of Bitcoin is relatively short and has only been around since 2009. Some experts say that the monetary conditions have been loose since the existence of crypto, so the claims cannot be conclusive.

Risks of Making Cryptocurrencies Part of Your Retirement Fund


Cryptos experience severe price fluctuations, and if this volatility is not something you can tolerate, then this may be a risky option for you.

Regulatory Risk

There are uncertain regulatory landscapes that cryptos face. Therefore, one needs to have thorough knowledge regarding the laws and regulations in the specific jurisdiction and internationally to ensure that everything complies with the required regulations.

Lack of Consumer Protection

If crypto is stolen – that’s it – you cannot get it back. Regarding regulations in the crypto market, there are none in several countries, while some level of it is still being formulated in others. This means that investors do not have the same level of protection as they would in traditional markets.

Complex Taxes

Cryptos are taxed differently according to each country. This also makes it challenging to figure out how to consider tax factors when planning for retirement.

Bottom Line

Unlike traditional stocks, cryptocurrencies lack regulation, so there is a sense of uncertainty regarding certain aspects, which poses a potential for vulnerability. That is why you need to play it smart by making crypto a smaller part of your retirement plan and avoiding making it the primary focus.

Whether you’re approaching retirement within a few years or there are many more years left to go before you plan for it, cryptocurrencies will undoubtedly be an option you will consider. When you include crypto in your retirement plan, you should be very cautious about the entire process. Ensure that you focus on diversification and consistency and carefully study the risk tolerance and retirement targets. Moreover, take time to do detailed research on the types of crypto you would like to put money in. When you have a well-thought-out plan, you can be sure that a retirement plan with cryptocurrencies can protect your financial security in your golden years.

Some others argue that a retirement portfolio should ensure financial security and that long-term investments make more sense. Those who back these claims also say cryptos are better off being considered short-term investments. There are other concerns about it as well, which include reasons such as that it’s volatile, not backed by banks or governments, and that hacking and stealing can happen.

This is why there is yet to be a conclusive answer as to whether or not cryptos should be part of a retirement plan. At the end of the day, the answer to this depends on each individual, their capacity, financial goals, and risk tolerance levels.