(401kSpecialist) - Even though the majority of Americans still view cryptocurrency as a volatile investment, that’s not stopping an increasing number of people from adding digital assets to retirement portfolios, according to a new poll from Capitalize.
In a key finding from the survey of 821 employees and just over 200 financial advisors, 61% of employees view digital assets as a strong retirement investment option, compared to 46.5% of financial advisors.
When asked whether digital assets were a strong long-term investment, even half of Baby Boomers (50.3%) said “yes,” while a predictably increasingly higher percentage of younger generations agreed: 58.6% of Gen X, 60.4% of Millennials and 78.2% of Gen Z.
Given that workers approaching retirement tend to lean toward more conservative investment allocations while avoiding volatile strategies that could quickly reduce account balances, it’s not surprising that older generations are wary of crypto. But it is notable that of the 821 total employee respondents, 57% said they view cryptocurrencies as a volatile investment vehicle, with 45% viewing them as risky.
Perhaps this is why just 5% of respondents report investing in a Bitcoin IRA to date. But FOMO (fear of missing out) may also be in play, as nearly half (49.9%) claim they would consider investing in a Bitcoin IRA while 45.4% said they are not considering it.
And most of the people that do end up pulling the trigger say they’re in it for the long run: Nearly four in five cryptocurrency owners plan to hold on to their coins until retirement.
While some respondents aren’t on board with investing in digital assets at all, the Capitalize survey found those who believe in the long-term investment potential include them greatly within their retirement portfolios. Among respondents who currently invest in digital assets for retirement, 38% of their total portfolio is allocated toward this investment class. 53% of these respondents invest in cryptocurrency, and slightly less than one-third invest in NFTs or memecoins.
Additionally, 15% of respondents who aren’t currently invested in digital assets said they plan to do so in the future.
Bitcoin in 401ks
Capitalize, the free retirement account rollover platform to help Americans consolidate their assets (named one of TIME’s Best Inventions of 2021), notes in its report on the poll that no 401k plan offered employees the option of investing in digital assets until recently.
401k Specialist reported in May 2020 that Bitwage launched the ‘World’s First’ Bitcoin 401k plan, and in November 2020 that DAiM launched the ‘First ERISA-Compliant’ Bitcoin 401k plan. In July of 2021, 401k provider ForUsAll entered into an agreement with Coinbase Global, a leading cryptocurrency exchange, to give workers the option of investing up to 5% of their retirement assets in crypto.
This may be just the beginning, the Capitalize report notes, saying that some financial experts believe that more 401k plans will offer some form of digital asset as an option for investors. Nearly three in five survey respondents in the poll said they would like to see digital asset options added to their employer-provided retirement plans.
Interestingly, respondents who currently invest in digital assets in their retirement portfolios expect to retire 8 to 13 years earlier than those who don’t invest in them. The poll found 48.7% of respondents expected to retire early due to cryptocurrency, NFT or memecoin investments (retire at 57.2 years old for cryptocurrency owners vs. 65.5 for those not owning digital assets).
Advisors less optimistic about digital assets
Over half of the financial advisers surveyed expressed confidence in crypto as a short-term strategy but were slightly less bullish on its long-term prospects. One issue involves the risk that advisers assign to digital assets. Over 80% placed cryptocurrencies in the “risky” category, with 76% considering it volatile. While 58% believe digital assets are “overhyped,” 55% still believe cryptos offer potential in retirement accounts.
Almost two-thirds of advisors wouldn’t recommend retirement investors allocate funds to any digital asset. As for whether financial advisors feel Bitcoin IRAs are a smart investment, 46% said no, with just 25% believing they’re a wise investment.
By Brian Anderson
February 16, 2022
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
