Should crypto be part of your retirement investing strategy? Here’s what financial pros say

When it comes to saving for retirement, there’s a lot to consider. Not only do you have to define your goals and what kind of life you want to live in retirement, but you also have to consider the types of investments to include in your retirement portfolio to help you get there.

With the rise of Bitcoin ETFs, and crypto IRAs introduced by financial giants like Fidelity, you may have questions about what role crypto should have in securing your retirement — and if it should even play a role at all.

We asked certified financial planners what they’re recommending to clients these days, what you should consider before investing and why.

It’s widely known that crypto is a speculative and volatile investment. This is because the digital asset isn’t backed by actual business performance or cash flow like stocks are. In the crypto world, prices are solely based on “vibes,” or how investors feel about a certain coin. The allure of big gains can be tempting, but prices hinge on market sentiment. Understanding this is key if you’re going to consider using crypto to help fund your retirement years. Crypto prices are fast moving, and not always in a good way.

“If you’re considering buying it just because it has risen 18 percent year-to-date, you may just be chasing returns and speculating rather than investing,” says David Rosenstrock, CFP, director of financial planning and investments at Wharton Wealth Planning LLC.

Rosenstrock also says it’s important to make sure your expectations surrounding crypto are well-informed. How might crypto contribute to your financial well-being? After all, saving for something like retirement often requires a long-term financial strategy, not the get-rich-quick potential that comes with the volatility of crypto. Knowing these risks is just the beginning.

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Your risk tolerance is how much risk you’re willing to take on when it comes to what types of assets to invest in. Everyone is different, and your risk tolerance will likely decrease as you near retirement, because you don’t want to be investing in risky assets that could dismantle your nest egg before cashing out.

If you’re younger, on the other hand, you have more time to compensate for potential losses. This allows you to consider investments that could earn a bigger profit, but also carry more risk, including crypto.

“From a risk perspective, the volatility and regulatory uncertainty of crypto puts it firmly in the speculative camp,” says Patrick Huey, CFP, owner and principal advisor of Victory Independent Planning. “Even with the arrival of ETFs and new brokerage access, retirees should treat digital currencies like a potent spice: A dash can liven up a recipe, but too much can ruin the whole meal. The core of your retirement nest egg deserves to be sturdy and time-tested.”