Cryptocurrency Allocations Raise Concerns for Retirees

A recent survey by Charles Schwab has highlighted a significant shift in the way American investors are allocating their portfolios. According to the study, 35% of investors now hold cryptocurrency, with 65% planning to increase their allocation over the next two decades.

While this trend may be driven by investor preference, it raises concerns among financial planners who warn that retirees may face significant volatility and sequence-of-returns risk if they rely too heavily on digital assets. The sequence-of-returns risk refers to the order in which gains and losses occur, which can have a major impact on investment returns.

The survey also found that the average investor's portfolio now carries more digital asset exposure than ETF exposure, a structural change from how household portfolios were typically built a decade ago. This shift has been driven by the growing popularity of cryptocurrency, with Bitcoin and Ethereum experiencing significant fluctuations in value over the past year.