Cryptocurrency in your retirement plan

Everyone has an idea of how they want to spend their retirement age; comfortable and with little worry. Retirement plans are mostly personal and it is beneficial to sit with a financial adviser to sort through ideas and possibilities.

You don’t have to wait until you’re older to start a retirement plan; in fact, it is better to start earlier. There are plans available for people from age 21. All the details are put together so you can figure out how much you’d need to live on during retirement based on whatever lifestyle you’d like to have in retirement.

The next step is retirement planning, putting together a process towards achieving all the things you want for retirement. This isn’t just financial; it is also health, housing, and other factors that surround retirement.

Just like it is advisable to have multiple streams of income, it is also advisable to have more than one option towards your retirement if possible.

Retirement plans options available

• Pensions

This retirement option only requires you to stay on your job long enough to retire and claim it. A pension is a fund set up to assist employees after their years of paid service and is usually added to the employee’s savings while he or she is still employed. It is usually set up by some employers as a defined benefit plan for the employee. It is “defined” because a fixed amount is usually added to the fund over time.

• Defined contribution plans

This is a tax deferred contribution plan for retirement in which the employee contributes to an employees’ retirement fund yearly. The employee is also allowed to make contributions automatically deducted from his paycheck to this fund. There are terms and conditions applied to how these funds can be accessed by the employee.

• Individual Retirement Account (IRA)

This is an individual investment account set up at a brokerage firm or financial institution towards retirement. What happens with an IRA is that the individual pays money that is tax deductible into the account which is then used to make investments in stocks, bonds, mutual funds and so on that are kept in that account until retirement when they can be accessed.

This is supposed to be better than just setting money aside since the money in the account is supposed to earn more money. The different types of IRAs include; Roth IRAs, SIMPLE IRAs, SEP IRAs and Traditional IRAs.

• Real estate

This option is almost always sure to be a winner as long as it is done right. After risks are weighed and other incurred costs are taken care of, it is a very good option for a retirement plan, especially for those who do not have plenty saved or are not well invested in other retirement plans options. It is important to talk to professionals about this option so as to avoid a major loss.

These are a few retirement plan options; there are more, and each with its own benefits and downsides. But today’s focus is cryptocurrency and how you can explore it for your retirement plans.

What is cryptocurrency?

You probably have come across the term cryptocurrency or bitcoin. These terms have been around for over a decade. Simply put, cryptocurrency is digital money. There are different types; Bitcoins, Ripple, Ethereum, Litecoin, Cardano and others.

But unlike regular currencies, cryptocurrencies aren’t geographically bound, neither are they bound by a certain government. This means that they cannot be affected in value by inflation or corruption and users can transfer funds almost instantly.

How can cryptocurrency be used as a retirement plan option?

Bitcoins are considered commodities. Like gold, oil and other commodities, Bitcoins do not depreciate when the stock market plows downward. They cannot count as investments except custodians are involved. IRAs, for instance, are usually handled by banks and other investments institutions. These bodies do not usually accept commodities as investments in retirement accounts.

There is a way around this though. Investors that wish to use commodities can use self directed IRAs, removing the need for a custodian’s approval. A self directed IRA allows you control and determine your investments especially in assets you are knowledgeable about. It does not limit you to stocks, bonds and mutual funds but allows you to also invest in commodities like gold, Bitcoins, and real estate.

It also gives you all the tax advantages you would get with retirement plans that are government sponsored. Cryptocurrency gurus like Crypto Coin Judge provide you with accurate comparisons and in-depth reviews of top cryptocurrency brokers to keep you abreast of current trends, news and information to help you make better decisions.

What about risks?

Every investment or financial plan has a risk. All other retirement options are subject to risks. They can be greatly depreciated when there are stock market problems. There have been cases of fraud even with all the regulations put in place to avoid that, and some plans simply don’t adjust to increased standards of living – which mean less value for a retiree years later. There are also so many operational costs involved.

The bottom line is that every retirement plan, no matter how well constructed, has its own risks. Whatever you want, you need to meet with experts and be well aware of all the risks involved, if there are ways around them, what has been done in the past and whether it is worth the risks involved. Remember I said earlier that self directed IRA works with you as the controller. For you to make financial decisions like this, you need to know as much as you can.

Conclusion

The world is changing and digital money is coming with that change. Cryptocurrencies are worth taking a second look at. They’ve been around for a while and have been increasing in recognition. Remember there are risks involved with every investment. Talk to people that have been at it; friends and family, find frequently asked questions on the internet, ask your own questions, do your own research and if you think it is doable, then go for it.