Nearly 50% of individuals from Generation Z and Millennials are interested in incorporating cryptocurrency into their 401(k) retirement accounts, as revealed in a survey conducted by Charles Schwab, a renowned asset management firm in the United States.
When asked about their preferences for additional investment options in their 401(k) plans, the survey highlighted that 46% of Gen Z and 45% of Millennials expressed a desire to include cryptocurrencies in their retirement savings strategy.
This inclination is consistent with the fact that a significant percentage of Gen Z and Millennials, 43% and 47% respectively, are already investing in cryptocurrencies outside of their 401(k) plans, indicating a strong interest in this particular asset class.
These findings were derived from a survey of 1,100 participants enrolled in 401(k) retirement plans, ranging in age from 21 to 70, which was conducted over a period of ten minutes between April 4 and April 19, 2022.
For context, Millennials typically encompass individuals born from the early 1980s to the mid-1990s, while Gen Z refers to those born from the mid to late 1990s to the early 2010s.
Interestingly, the survey results diverged significantly among Gen X and Baby Boomers, with only 31% and 11% respectively expressing an interest in investing in cryptocurrencies through their 401(k) plans, and considerably fewer already participating in this asset class.
Overall, concerns related to inflation emerged as the primary challenge faced by individuals when planning for retirement.
Another study conducted by Investopedia in April indicated that a smaller proportion of Millennials (28%) and Gen Z respondents (17%) in the United States anticipated utilizing cryptocurrency to support their retirement finances.
While Charles Schwab currently does not facilitate cryptocurrency investments within their 401(k) retirement offerings, efforts have been underway since February 2019 to introduce crypto-based retirement funds.
For instance, Fidelity Investments announced plans in April to enable Bitcoin (BTC) investments for their 401(k) account holders, allowing individuals to allocate up to 20% of their savings portfolio to Bitcoin.
Moreover, Rest Super in Australia emerged as the pioneer in offering cryptocurrency allocation as part of a diversified portfolio to its 1.9 million members in November 2021.
Although most digital asset retirement funds primarily focus on Bitcoin or Ether (ETH), a county in North Virginia explored the possibility of allocating a portion of retirees’ pension funds to a decentralized finance (DeFi) yield farming account starting in May 2022, a move that was later approved in August 2022.
However, there are risks involved, as evidenced by a Quebec pension fund that suffered substantial losses of $154.7 million due to heavy investments in the now-defunct cryptocurrency lending platform Celsius.
Such controversies have led to divided opinions among U.S. Senators regarding the viability of crypto-exposed 401(k) retirement plans, with Senators like Elizabeth Warren, Dick Durbin, and Tina Smith expressing concerns over jeopardizing Americans’ retirement savings through exposure to “cryptocurrency casinos.”
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