Crypto retirement: Targeting 3x returns with Bitcoin and other digital assets

The time-honoured advice for older people approaching retirement is to reduce your exposure to risky assets to preserve your nest egg. But what if your nest egg has already been destroyed and you need a high-risk/high-return method to make it all back in the space of a few years so you can retire comfortably?

The time-honoured advice for older people approaching retirement is to reduce your exposure to risky assets and preserve your nest egg.

But what if your nest egg has already been destroyed and you need a high-risk/high-return method to make it all back in the space of a few years so you can retire comfortably?

It’s not a strategy for the faint-hearted — and it could easily go horribly wrong in the event of a sudden crash to a prolonged bear market — but some crypto investors see it as their last, best hope.

“I think your risk appetite would have to be pretty extreme to have all your eggs in any one basket, especially if that’s a volatile asset like crypto,” says payments consultant and former banker Rod Tasker.

Sydney project manager Alex P. is trying to set himself up once again for retirement after he lost the majority of his holdings in the collapse of Celsius, a risky crypto lending venture masquerading as a safe, bank-like platform that provided unusually high interest on crypto savings accounts.

The 52-year-old tells Magazine he invested all of his family’s funds into Celsius and switched his Self Managed Super Fund (SMSF) there too — that’s the Australian equivalent of a self-directed Individual Retirement Account (IRA). His 80-year-old mother saw how much interest he was getting from the platform and invested her retirement savings in Celsius too.

“I completely drank the Kool-Aid of that business, so I had most of my crypto there,” he says. “You could essentially have financial freedom and one day retire and then live off the income, which is what we did.”

Celsius crypto retirement dream turns into a nightmare

For a while, the family was living the dream, and Alex and his wife quit their jobs in 2021 to live off the yield paid on their investments.

Unfortunately, the dream turned into a nightmare. The “interest” was actually paid from the accounts of other users, and the scheme collapsed in mid-2022. Not only did Alex lose the majority of his funds, but he still had to pay an outstanding $400,000 tax bill on the income he’d earned.

“I put too many eggs in the Celsius network basket. So basically, I nearly lost the family home. My mum invested. I invested in it. So to say it was catastrophically damaging would be an understatement.”

“It took a lot for me to not kind of go ‘where’s the nearest bridge?'” he adds.

After battling for two years, they received back 25% of the crypto they’d invested via bankruptcy distributions. Alex blames himself rather than the crypto industry, and he’s determined to make it back.

Apart from the family home, all of his available funds have been reinvested in Bitcoin and other crypto assets, including his SMSF retirement account. He’s also trying to nurse his mom’s 25% portfolio back to life and spends around $15,000 a year to get advice in the Platinum group of crypto education outfit Collective Shift.

“Essentially, now it’s just a matter of, you know, trying to pick the right assets within the SMSF, being a little bit maybe more risk-on with the crypto assets in order to try and build it back up again,” he says.

“Whereas with the personal portfolio, I’m trying to be less risky with that because, obviously, there’s too much on the line for me to take too much risk.”

Also read: Baby boomers worth $79T are finally getting on board with Bitcoin

Finance professionals advise against going all in on crypto retirement

Juanita Wrenn, managing director of Hudson Financial Partners, says the firm is unable to directly recommend crypto to clients for regulatory reasons, but they advise clients who already have it in their retirement funds to “cap crypto exposure at 2–5% of the total balance.

“That’s enough to benefit from upside if it performs, but not enough to cause catastrophic loss.”

She says it’s understandable, but very risky, to try to make a lot of money quickly to retire comfortably.

“This is the most emotionally charged scenario, and the one where people are most tempted to take big risks. But here’s the truth: Chasing huge gains late in the game can often backfire worse than doing nothing at all.”

Australians are fortunate that even a modest retirement account — around 314,000 Australian dollars ($205,000) is the sweet spot — can provide a comfortable retirement when combined with the government’s age pension.

“Speculative bets like crypto are often more dangerous than they seem. Even a modest, well-structured portfolio — paired with age pension entitlements — can offer security and peace of mind.”

Also read: Retire early with crypto?