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Can You Use Bitcoin For Your Retirement Plan?

Can You Use Bitcoin For Your Retirement Plan?

That question provokes a wide range of responses with most being incredulous that you would think about a cryptocurrency as a retirement plan. The thinking is that Bitcoin is far too volatile to trust with your finances when you are on a limited income.

The reality is that there are retirement options with Bitcoin. In fact, there is even a retirement account called a Bitcoin IRA. This is a self-directed IRA provided by a few institutions that allow you to invest in alternative retirement savings plans. 

Now, some people will say that this goes counter to the whole decentralized nature of the blockchain and cryptocurrency. 

It’s always best to have multiple options for your retirement so there’s no reason it can’t also include Bitcoin. 

How a Bitcoin IRA works

When you have a traditional IRA your account will use your money for things like stocks, bonds, and mutual funds. With a Bitcoin IRA, your money is tied up in the cryptocoin and rises and falls with its value.

You’ll have a custodian that helps you to manage this money as you can also be moving the money around to other alt coins like Ethereum and Ripple, among others. As long as you know how to buy Bitcoins with a debit card then you don’t have to understand how any of the blockchains works with the help of your custodian. 

Keep in mind that this custodian for your fund is not a fiduciary and he or she has no responsibility to the investor if things go bad.

High risk, high reward

There’s no question that using a Bitcoin IRA is going to be risky. I don’t think you would find anybody trustworthy that would tell you to invest all of your savings there. If you are looking for a high return on your investment, then putting some money in that you can afford to lose is not a bad idea.

This type of IRA is good for some diversity and may even offer some protection against fiat currencies. There is some volatility involved, of course. For example, it took years for Bitcoin to hit the $1000 per coin threshold. Then, almost overnight it raced up to over $10,000 within a year. Even faster was the crash. In early 2018, it dropped way down to $6,000.

As dramatic as that seems, it was still far above that $1,000 mark from a year earlier. But, if one had invested in late 2017 then that would have been a considerable loss.


There are also some high costs to consider. There are monthly management fees to pay for the account. Plus, many managers will require a percentage of the account balance as their fee.

Many traditional IRAs don’t charge any fees. They also don’t have the same possibility of skyrocketing in value when the currency gains momentum. That volatility so many people talk about can work in your favor. If you are comfortable with some risk then the reward can be quite good.

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