How Much Bitcoin Do You Need to Retire?

How Much Bitcoin Do You Need to Retire?

How much bitcoin do you need to retire
How much Bitcoin do you need to retire?

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Cryptocurrency is making the headlines once again. Recently, there’s been a movement by some financial experts to add crypto as a retirement investment option. This move generates mixed reactions as some pundits believe doing so is terrible. 

 

On the other hand, many financial advisors seem to be receptive to the idea and claim cryptocurrency would give people a well-balanced investment portfolio for their retirement plans.

 

You must be wondering, “Can I retire on Bitcoin?” Or, “How much crypto do I need to retire?” This article will estimate what a safe retirement on crypto might look like and if you should consider doing so in the first place. 

 

But before we give you a specific answer to “How Much Bitcoin do You Need to Retire?” You should know some things before adding crypto to your retirement savings. 

 

What to Consider Before Adding Bitcoin to Your Retirement Savings?

Retire with Bitcoin

The decision to add bitcoin or other cryptocurrencies to your 401(k) account is not something you should make hastily. Evaluate your long-term financial objectives and ensure they are in alignment before making such a big decision.

 

Instead of getting drawn in simply because the price dropped, we advise investors to have a specific purpose before purchasing cryptocurrency.

Also, you should know how much of your overall portfolio would consist of cryptocurrencies and confirm that the allocation meets your risk tolerance.

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How Many Bitcoins Do You Need to Retire?

How much Bitcoin do you need to retire

Due to the tremendous volatility of the cryptocurrency market, this question may be challenging to answer. But it’s the same as asking, “how much money do you need to retire?” 

 

Well, that all depends.

 

The amount of BTC you’ll need for retirement will depend on several factors, including where you live, the cost of living there, and the type of lifestyle you now have or want.

 

Consider the following scenario to get an idea of a number to expect.

Let’s assume that to live comfortably in retirement in the following cities, Dubai, New York, London, Paris, Shanghai, and Tokyo,  you would require 1 BTC every month. 

Assuming the price of a bitcoin stabilised at $10,000 — which is impossible. Now, you’ll be practically able to live quite comfortably on that anywhere in the world. However, the situation is different when we consider bitcoin’s volatility. 

So if you had banked on living out the next thirty years on one bitcoin a month because you had managed to amass 360 BTC, you might start retirement looking nice. 

But what if the price falls, you have no other source of income, and your (fictitious) retirement contract requires you to maintain your bitcoin investment?

What if, after five years of establishing a $10,000 per month lifestyle that you had gotten accustomed to, you were now forced to live on $1,000 per month?

 

In the best-case scenario, though, the value increases, and you have more than enough money for retirement.

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Risks Involved with Investing in Bitcoin

A crypto investment comes with several risks, including:

 

  • Regulatory risk: To ensure “investor safety,” regulators are working hard to find a mechanism to regulate cryptocurrency. Regulations may severely impact prices if they successfully create a framework.
  • Insurance risk: Since neither the Securities Investor Protection Corporation nor the Federal Depository Insurance Corporation insures cryptocurrency, you have no way of getting your money back if stolen.
  • Market risk: Some cryptocurrencies experience daily price fluctuations of up to hundreds of dollars. A bear market can jeopardise your retirement.
  • Fraud risk: Like every other investment, cryptocurrency is susceptible to scams by impersonators and fraudsters looking to steal your money from you. 

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Bottom Line

Although you are free to invest your money in any way you see fit, we advise you to be cautious before investing something as significant as your retirement funds in cryptocurrencies. We suggest keeping your cryptocurrency investments for retirement to 10% of your whole investment portfolio.

Cryptocurrency might one day prove to be more than just a piece of speculation. Right now, it’s far from that.

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