Should Millennials Rely on Crypto for Retirement?

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New research shows that huge swaths of the millennial generation are betting big on cryptocurrency — maybe too big. In fact, more than a quarter of them have so much faith in Bitcoin, Ethereum and the rest that they’re betting their retirements on portfolios filled almost entirely with crypto.

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There’s no doubt that blockchain-based currency is poised to play a major role in the future of investing, the economy and digital life in general. But when it comes to the trend of millennials gambling their retirements on computer-generated tokens, GOBankingRates talked to several experts who think they might be putting far too much faith in a trendy, but risky and uncertain investment. Here’s what these experts suggest.

Don’t Wager Your Future on Something Risky and Unregulated

In offering his opinion on whether young and young-ish adults should rely on crypto for their retirement funds, Clark Hodges, co-owner of Hodges Capital Management, is crystal clear on where he stands.

“No, no, no,” he said. “As I sit here and contemplate millennials considering cryptocurrencies as the base for their retirement plans, it really does concern me for their futures.”

He’s not opposed to crypto playing some role in any portfolio, but he believes that banking on Bitcoin is a recipe for regret in old age — and it’s not just crypto. Any high-risk, high-reward asset should account for only a small piece of your portfolio pie, especially one that’s still so new that its regulatory guidelines haven’t even finished baking.

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“A risky asset should be a small part of a retirement strategy, not the full strategy,” he said. “Cryptocurrencies are assets that are still very new and unregulated, which increases their risk. What will the landscape look like after the government gets in and has its effect on the cryptocurrency market? I would not want to own cryptocurrency in a major way when that is unfolding right before our very eyes. Traditional stocks and bonds and real estate assets as a long-term retirement strategy are still the most proven way to grow wealth over time. Do what has worked for decades. Buy good quality American companies with good quality earnings that go up in value because the companies make more money year in and year out.”

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Do You Have the Self-Discipline Needed for Slow and Steady Racing?

It’s easy to understand why crypto is such a tempting lure when your portfolio tracker’s chart is racing skyward.

“Crypto is exciting to invest in,” said Matthew Robbs, founder of Smart Saving Advice. “If you pick the right coin at the right time, you can get five, 10 or 100 times your investment in a matter of a few months or years.”

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Picking the right coin at the right time, however, is easier said than done, and overpriced speculative investments have a way of crashing down hard.

“In the last two years, Bitcoin went from $10,000 to $55,000 in five months and then went from $55,000 to $33,000 in four months,” said Robbs. “Bitcoin then went up to $69,000 before plummeting to $17,000 over a seven-month period.”

The remedy for such extreme volatility is the same remedy that can soften turbulence in the stock market — making steady and consistent contributions over time that will even out the peaks and valleys. The easiest method is dollar-cost averaging, but it requires a whole lot of discipline when the highs are so high and the lows are so low.

“The volatility of crypto is great when it’s going up, but most people don’t have the fortitude to continue to dollar-cost average into crypto when it drops by 75% in a seven-month period, as it has recently,” said Robbs. “Investing a portion of your retirement funds into crypto can be a good idea as long as you continue to do it on a monthly basis for many years to come.”

Whatever you do, don’t sink what you have into the crypto markets all at once.

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“Investing all of your retirement income into crypto only to have it drop 75% over a seven-month period will likely cause you to give up on it,” said Robbs. “Right before it starts to make another run-up.”

The Same Rules Apply No Matter Your Generation

The biggest mistake might be to assume that big bets on crypto are OK for one generation but not for another. While younger investors typically have more time to absorb greater losses and can therefore afford to take bigger risks, the basic rules of the game apply irrespective of age demographics.

Remember, the future you will live and die by today’s investment decisions. Make them count, because there will be no do-overs.

“No one, much less millennials, should rely on cryptocurrency to fund their retirement plan,” said Taylor Tepper, an investing and retirement writer for Forbes Advisor. “You have one chance to accumulate sufficient savings to enjoy a secure stream of retirement income. You’re better off investing those savings in a well-diversified portfolio of stock and bond funds — a recipe that has proven successful over decades — than guesstimating Bitcoin’s long-term success. Fans of cryptocurrency will likely be better off investing a small portion of their savings — say, 5% — in order to satisfy their itch. Anything more, though, is too risky.”

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for, a financial publication in the heart of Wall Street's investment community in New York City.
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