Wealth Building With Cryptocurrency: A Generational Divide

Takeaways

• Many older Americans shy away from cryptocurrencies as an investment vehicle for their retirement.

• Millennials and Gen Z also view cryptocurrencies as risky — but as a risk worth taking.

We’re living in an increasingly digital world where virtually all areas of our life are penetrated by technology.

Not surprisingly, younger Americans who have grown up in the presence of digital technology and the internet are more eager to embrace it than those who were born prior to the information age. This digital divide takes center stage in the world of cryptocurrency — something that most Americans have heard of, but few have used.

Cryptocurrencies are generally considered a risky option for investing money, especially for older Americans who are in or close to retirement. But millennials and Gen Z consider them a risk worth taking, and these “digital natives” who receive an inheritance could end up driving significant demand in the crypto market.

Generational Views on Crypto

Generations often define themselves against the previous ones. One area where millennials and Gen Z diverge sharply from baby boomers is their approach to money, financial planning, and investing.

Baby boomers came of age during a relatively stable and prosperous period in American history. The post-World War II economic boom provided them with strong opportunities for job security, affordable housing, and overall economic stability throughout their working lives.

Younger generations have faced more economic challenges during their formative years, including the dot-com bubble bursting in 2000, the 2008 financial crisis, high student loan debt, rising housing costs, inflation, and the pandemic. With their faith in traditional investments shaken by market unpredictability, they’re turning more to alternatives like cryptocurrency, studies show.

A 2024 study from Bank of America Private Bank, for example, found that three-quarters of investors between the ages of 21 and 43 believe it is “no longer possible to achieve above-average investment returns by investing solely in traditional stocks and bonds,” versus 28 percent of investors over age 44.

This view is borne out in their portfolio composition: stocks and bonds make up less than half of younger investors’ portfolios, compared with 74 percent for older investors.

So where are millennials and Gen Z putting their money? Younger investors allocate 31 percent of their portfolios to alternative investments and cryptocurrency, while older investors allocate just 6 percent to these asset classes, according to the Bank of America data.

Nearly half (49 percent) of the young cohort own cryptocurrencies and 38 percent are interested in owning it. They rank crypto second only to real estate as the top area for growth opportunity, while older investors rank crypto near the bottom for growth potential.

Another survey found that millennials and Gen Z are as likely to own cryptocurrencies are they are to own real estate. Millennial and Gen Z investors are also more likely to own crypto than have a retirement account, according to an investment trends report from YouGov.

Crypto Risks Could Disrupt Retirement Savings

Studies with similar findings aren’t limited to the United States, suggesting deeper generational divides about not only tech-based investing, but technology in general.

A UK study found that investing in digital assets like cryptocurrencies was the biggest generational difference in investment priorities. Globally, a study covering over 255,000 people in 26 countries, including the U.S., China, Nigeria, Japan, and Indonesia, revealed that 46 percent of millennials own cryptocurrency, versus just 8 percent of baby boomers.

Younger people are quick to embrace FinTech, or new technologies focused on financial applications, to manage their investments. These tools, such as e-trading platforms, robo-advisors, and artificial intelligence, combined with digital assets like crypto that can be traded globally from a smartphone, as well as abundant online investing resources, are part of what’s been called the “democratizing” of investment, or lowering barriers of entry to make investing more accessible to the average person.

Driven by FinTech and alternative investments such as cryptocurrency, retirement investing is ripe for disruption. Depending on who you ask — and who’s investing — this disruption may or may not be a good thing.

Alternative investment firm Rocket Dollar cites research claiming that there has been a surge in demand for investing in alternative investments through a retirement account. However, experts warn that crypto investments may not be a good strategy for people who are closing in on retirement or already there.

One area where older and younger investors agree is that crypto is risky. Eighty-three percent of respondents in the YouGov investment trends report said that cryptocurrency is a risky investment. That includes 84 percent of Gen Z and 79 percent of millennial investors — not far off from the 89 percent of baby boomer investors who see crypto as a risky investment.

So why take the risk investing in crypto? It may stem from a need to make up for lost time and missed opportunities.

Members of Gen Z are actually starting to invest at a younger age than older generations did. One-quarter began investing before they were 18. But a subset of younger Americans — particularly men and those who only started investing since the pandemic — have shown a greater appetite for risk than what other Americans their age or older Americans tend to invest in.

Bitcoin, the first cryptocurrency, and cryptocurrencies more generally, are known for extreme price volatility. Although the price of Bitcoin has steadily increased since its inception in 2008, there have been wild swings in its prices, at times as much as thousands of dollars in a single day.

Many of the factors behind this volatility, such as speculation, supply and demand, and media reports, are not unique to Bitcoin, which is less volatile than many popular mega-cap stocks. Its volatility has also decreased over time and is expected to continue doing so.

But Bitcoin is just one cryptocurrency among many. Thousands of cryptocurrencies have been created since Bitcoin's launch. The vast majority of these have failed, either due to lack of adoption, technical issues, scams, or simply fading away.

By one estimate, there are around 25,000 cryptocurrencies as of February 2025. New types can be created with relative ease and for specific purposes. Some may be legitimate innovations that provide high investment returns. Others vanish virtually overnight. Theft is an issue as well. Over $1.7 billion in cryptocurrency was stolen in 2023.

AARP cautions that even a more proven crypto commodity like Bitcoin presents the potential for huge losses, making it a risky option for retirees and workers nearing retirement.

Retirees need steady, reliable income to replace their former wages or business earnings. The lowest risk options are interest-bearing investments such as certificates of deposit, money market accounts, and guaranteed fixed annuities.

Stocks and bonds are popular among older investors and can be part of a balanced portfolio, but they are not without risks of their own. However, cryptocurrency is still in its infancy and is less regulated than traditional investments, potentially making the crypto space far riskier than stock and bond markets.

Cryptocurrency and Estate Planning

Many older Americans have no retirement savings, which can make it tempting to adopt a mindset similar to younger investors who are just starting to save and may have greater risk tolerance.

Forty-three percent of 55- to 64-year-olds had no retirement savings at all in 2022. The typical senior with a retirement account has about $200,000 saved. But seniors who have saved money might fear there will be nothing left after their death due to age-related medical expenses. Many are already sacrificing basic needs to pay for health care.

The harsh reality of age-related costs exposes another generational divide: the so-called “inheritance gap.” Thirty-eight percent of Gen Z and 32 percent of millennials expect to inherit their parents’ wealth. Yet just 22 percent of baby boomers expect to leave anything to their children.

These projections throw cold water on the Great Wealth Transfer that is expected to pass $84 trillion from seniors and baby boomers to their heirs by 2045. Given generational investing trends, though, Gen Z and millennials who do end up inheriting could drive an additional $6 trillion into the crypto market over the next 20 years.

Anyone who owns digital currency must understand the complexities of incorporating crypto into an estate plan. Cryptocurrency, for example, may be considered a tangible or intangible asset depending on how it’s stored, affecting considerations like asset titling, transfers, and transfer taxes. Cryptocurrency volatility and security can also present issues for trustees, executors, and agents under a power of attorney in an estate plan.

Cryptocurrencies and other digital assets, including social media accounts, cloud data, online financial accounts, digital collections, domain names, and intellectual property, should be part of a larger discussion about a digital estate plan with your estate planning attorney. They can assist you in building the right plan based on your short-term and long-term goals, personal circumstances, and financial situation.