My 20-year-old son and all of his college buddies actively traded cryptocurrencies through college. They “made” hundreds of thousands of dollars on very modest seed capital. None graduated as millionaires from their speculation. They are young, and not prone to regret. And, hopefully, they learned a valuable lesson about easy money and didn’t mourn their paper losses with a red solo cup of beer. Most crypto investments are all funny money, except when you buy or sell.
Win or lose, he is young and learning is the right takeaway. And, as a college kid, he has a lifetime to build wealth. And, his losses are limited too as he has yet to save big sums of money from his internships and jobs teaching surfing.
You, on the other hand, as a person who has worked hard and built some wealth, do have something to lose. Is investing in cryptocurrencies something you should be looking at for retirement? Are the risks worth it? Maybe. Maybe not.
What is a Cryptocurrency?
Cryptocurrencies are digital monies that can be used to buy goods and services. However, they are most well known as being a speculative investment. Most people who buy cryptocurrencies do so because they think the value of the tokens will go up in value. Fewer people see it as a decentralized currency and a way to take away power from the federal reserve.
Cryptocurrencies differ mainly from traditional currency by the fact that they are accounted for on a publically-accessible ledger, also known as a “blockchain”. Everyone can see where a specific “coin” has been and validate that it is real. Traditional currency, on the other hand, is only tracked by the governments who issue them. And while traditional currency can be created and destroyed at the will of the issuing government, cryptocurrency is “mined” in a process of solving increasingly-difficult computer algorithms, can be limited in maximum minable currency, and cannot be destroyed (although they can be “lost” by being sent to an invalid digital wallet), unless the blockchain that accounts for them ceases to exist.
While most of us first heard about them early in their development when they were used by illegal online black markets, such as the infamous, now defunct Silk Road, they have received a new larger wave of popularity over Covid as the value of them spiked.
One of the fist and certainly the most well-known cryptocurrency is Bitcoin.
- The value of one Bitcoin was $327 in November 2015.
- Five years later in November of 2020, each Bitcoin was rising rapidly and traded in the range of $15,000–$20,000
- As of early August 2025, Bitcoin is trading at ~$117,000, a massive increase
Pros and Cons of Owning Cryptocurrencies for Retirement
Here are a few considerations, pros, and cons of owning cryptocurrencies for retirement:
Not a Good Bet for Needed Monies
Most people will need every last cent in their retirement accounts for retirement expenses and then some. The reality is that most people simply haven’t saved adequately for retirement.
And, the conventional wisdom is that money you will need for retirement should be invested more conservatively than excess funds.
In other words, the money that you need or want to spend should be invested prudently with an eye toward your goals, the timing of when you will need access to your funds, and risk tolerance.
NPR’s Marketplace’s Senior Economics Contributor said in an interview, “Look, the crypto ecosystem is noisy, it’s volatile, it’s opaque. And we’re talking about your retirement savings. This is money that should add to your economic security in your elder years. And over the past four decades, during this 401(k) era, the evidence is overwhelming that workers saving for their retirement are better off as buy-and-hold investors, in low-fee investments, I mean really low-fee investments, rather than actively trading their accounts. Trying to beat the market, whether it’s stocks or crypto, is a loser’s game.”
However, if you 1) have all of your possible expenses covered for retirement plus extra for anything unexpected and still have excess funds, 2) don’t mind taking big risks, and 3) you want to roll the dice, then there is probably nothing inherently wrong with risking some of your available funds in cryptocurrencies.
Risk
Cryptocurrencies are an entirely new paradigm. It is the wild west of investing. The rules, expectations, and mores are being written as you read this and will change again tomorrow. There is absolutely no way to predict what will happen with them in the future. Many would say that calling them risky would be an understatement.
Others would argue that cryptocurrencies are here to stay and that not investing is riskier than investing.
Volatility
Even though Bitcoin is arguably the most well-established cryptocurrency, it has still seen huge volatility. In March of 2021, Bitcoin was trading at over $60,000. Four months later, in July of 2021, the price was cut nearly in half to about $31,500 before bounding upward again…. And, back down to $35,000 through much of 2023.
Crypto Not Available in Most Traditional Retirement Accounts
Most retirement accounts do not allow you to invest in cryptocurrencies. You will likely need to rollover your retirement funds into a self-directed IRA that allows investments in crypto.
Hard to Know Which Cryptocurrency to Invest In
Bitcoin and Ethereum are probably the most well-known cryptocurrencies. (As such, some think that these two currencies are likely overvalued.)
If you think that those coins are overvalued, there are thousands of other cryptocurrencies to consider. CoinMarketCap estimates that there are currently more than 13,500 cryptocurrencies in existence.
And, new cryptocurrencies are launched everyday.
What’s the right choice for you? Who knows.
Tax Complications and Record Keeping
In the United States, cryptocurrency is taxed similarly to gains and losses on stocks. You realize either short-term or long-term capital gains or losses.
However, reporting is not as well established as it is with stock and other asset trades. (Though Biden’s new law will impose recordkeeping duties for cryptocurrency trades starting in 2023.) As such, you must be able to keep good records of your trades and positions.
Specialized Brokerages and Exchanges
Most cryptocurrencies are traded on a cryptocurrency exchange. You can trade cryptocurrencies directly on an exchange or through a broker.
Using a broker means higher fees, but it is less confusing. Buying directly on an exchange can be complicated.
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Theft and Hacking
Cryptocurrency exchanges are not backed by protections like the Federal Deposit Insurance Corp.
With cryptocurrencies, there is risk of theft or hacking. You can keep your investment on the exchange, store it online off of the exchange, or keep your holdings on an external device like a USB drive.
All storage methods have risks.
Diversification
Cryptocurrencies do offer diversity in your portfolio. However, investors typically seek diversity to balance different kinds of risks and rewards.
How cryptocurrencies will rise and fall in concert to or opposition to other types of investments is not yet known.
FOMO and Regret
FOMO stands for fear of missing out. It is a term that refers to anticipatory regret.
Whether it is today, tomorrow, in 6 months, or 5 years from now, some of us might be kicking ourselves for not investing in cryptocurrencies.
Maybe you already feel that way. If this is you, devote a modest amount to speculation. Just make sure you are comfortable with the gamble.
Unregulated
There is no official oversight for cryptocurrencies. As we mentioned earlier, this is the wild west, but before even sheriffs were appointed.
So, Still Want to Hold Cryptocurrencies? Make Sure They Work as Part of Your Retirement Plan
There is nothing inherently good or bad about any retirement investment. You simply want to make sure that the asset makes sense for your retirement goals.
If you want to invest in cryptocurrencies for retirement, use the Boldin Retirement Planner to make sure that you:
- Currently have adequate available funds that won’t be needed to cover current or future known (or unknown) expenses
- Project pessimistically for losses and, if you set a particularly optimistic rate of return for gains (and possible tax implications), then the Planner’s Monte Carlo functionality will assume higher volatility on the investment.
About Boldin
For people who want clarity about their choices today and their financial security tomorrow, Boldin is a financial planning platform that gives people the ability to discover, design, and manage personalized paths to a secure future.
Our goal is to make high-quality, low-cost financial guidance available to everyone. More than 155,000 people representing more than $168 Billion in wealth currently trust the system to make the most of their money and time. The platform can be co-branded or white labeled for partners. Additionally, the company provides API access to companies who wish to embed planning functionality within their own site.