Bitcoin for Retirement

Can You Use Bitcoin for Retirement in Europe?


Using Bitcoin for retirement has drawn heavy fire from traditional investment analysts, primarily citing the volatility of the emerging asset class. However, much to the dismay of crypto skeptics, major financial institutions have begun embracing cryptocurrency for American 401(k) accounts and IRAs, two cornerstones of retirement savings in the U.S.

After conducting in-depth analysis and market research, companies like Fidelity chose to include Bitcoin in retirement accounts. The inclusion of Bitcoin in retirement accounts by reputable financial institutions exemplifies the mainstream adoption crypto enthusiasts have been working towards for over a decade.

Including Bitcoin in your long-term investment portfolio can be risky, but it can also become an essential asset as you work towards retirement. Are you ready to explore how Europeans can include Bitcoin in their retirement plans? 

This article will discuss everything you need to know about retiring with Bitcoin, such as investing in it, the ideal portfolio percentage, the benefits of including Bitcoin, and risks you should be aware of. Read on to decide if Bitcoin is a suitable investment for you.

Europeans Need Self-Managed Financial Services

While our friends in the United States have IRAs and 401(k)s that create the backbone of retirement plans, there is no equivalent of these accounts throughout Europe. Instead, every European country has its own retirement accounts or lack thereof. 

What does this mean for using Bitcoin for retirement in Europe? You’ll need to use a self-managed investment account for your long-term plans, such as Coinmotion’s coinmotion wealth accounts

You’ll then need to decide how much of your income you want to set aside for the crypto portion of your retirement portfolio. Then, buy Bitcoin with every paycheck to build up your crypto retirement fund.

Bitcoin for Retirement: What Percentage of Your Portfolio is Right?

The key factors that dictate the size of your crypto allocation are your age, level of wealth, and risk tolerance. Most investors land somewhere between 1% to 5%, with some outliers on either end of the spectrum. 

The higher your percentage, the more susceptible you are to gaining or losing value as the crypto markets wax and wane. You should understand this risk as you build your Bitcoin retirement portfolio. You may experience massive gains or dramatic losses when it comes to retirement.

Should You Consider Other Cryptocurrencies?

We’ve been talking about Bitcoin, but it’s not the only cryptocurrency in town. You can put all of your crypto allocations into Bitcoin or explore other cryptocurrencies to round out your retirement portfolio. 

Like building a typical cryptocurrency portfolio, it’s all about your risk level. Stablecoins and legacy coins like Bitcoin are low-to-medium risk, while newer cryptos and projects are at higher risk. 

Keep in mind that the goal of a retirement portfolio is to fund your life after you retire from your career. You’re playing the long game, not looking to make a profit in a few months. Coins and blockchain projects with a proven record of growth are ideal, while brand new coins (especially meme coins like Shiba Inu) probably aren’t ideal for long-term growth. 

Of course, nobody knows the future. Maybe in 2040, we’ll all be using Shiba Inu to pay our bills. So you need to understand your risk level because Shiba Inu might also not even be around in 2040. 

Top Benefits of Using Bitcoin for Retirement

Why should you consider using Bitcoin for retirement? What are the benefits of making a long-term investment in an emerging asset class?

Reap the Rewards of a Growing Asset Class

Bitcoin has been steadily growing in value since its invention. Within a few years of its release, other coins were created using the open-source software, and it spawned an entire asset class that’s now composed of thousands of cryptocurrencies and blockchains. 

What if you could’ve bought stock in Microsoft or Amazon in the early days? Or, to be even more accurate, what if you could’ve bought some of the first stocks in general? 

Investing in an entirely new asset class has incredible potential. Of course, time will tell if the asset class will continue to grow over the coming decades, but so far, its first decade has been explosive.

Potentially Retire Earlier than Planned

Let yourself dream; what if Bitcoin reaches new heights that might seem ridiculous today? The current price of Bitcoin was pure fantasy only a few years ago, but now US$20,000 seems low. 

Folding Bitcoin into your retirement portfolio might mean retiring earlier than expected. The crypto may reach heights in the coming decades, making your 1% allocation immensely valuable. 

Of course, skeptics still warn of cryptocurrency disappearing entirely, so it’s up to your risk tolerance.

Benefit from Growing Consumer and Merchant Adoption

Every day a new consumer buys their first few satoshis (the smallest unit of Bitcoin), and a new merchant decides to accept cryptocurrency. 

Ultimately, adoption is what will genuinely create long-term value for Bitcoin. A common and somewhat valid critique of crypto is a speculative asset. However, pro-Bitcoin investors believe it will gain traction as an actual currency. 

As more people start using it for commerce, it takes on a new life beyond a store of value. As adoption continues, your retirement portfolio will benefit.

What Are the Risks of Using Bitcoin for Retirement?

The primary risk of using Bitcoin for retirement is its volatility. Bitcoin has earned plenty of attention in the past few years as it exploded last year to a new all-time of US$68,789 and then dropped 52% to US$32,804. The substantial decrease has again drawn fire from crypto skeptics, calling the asset class too volatile for serious investments. 

However, you can find articles dating back to the first few years of Bitcoin’s invention saying that “Bitcoin is Dead” due to similar price changes. For example, Forbes has an article from 2011 titled “So, That’s the End of Bitcoin Then” when it was trading at US$15.15. 

Investing in Bitcoin for retirement means playing the long game and weathering impressive gains and unfortunate drops. Do you think Bitcoin is going to ultimately gain value before you retire? Then buckle up and expect your crypto allocation to be a roller coaster ride.

You Need a Trusted Cryptocurrency Bank Provider

Some long-term investors take full responsibility for their coins and store them in non-custodial wallets. However, this risks losing the recovery keys before you retire. That would mean your entire crypto allocation is gone, regardless of whether it gained or lost value. 

Instead, choosing a trusted custodial wallet provider means you’ll have ways to recover your account should you somehow lose access. You won’t be restricted to safely storing private keys and recovery phrases; you’ll have a cryptocurrency bank account similar to your fiat bank account. 

Coinmotion offers secure custodial wallets to suit your long-term investment needs. Your coins will be safe and ready to spend when it’s time to retire — set up an account today to start building your retirement crypto allocation.

The views, thoughts, and opinions expressed in the text belong to the author and not necessarily to the author’s employer, organization, committee, or other group or individual.

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