Nearly Half of Younger People Want Crypto Exposure in 401(k)s, Schwab Study Says

Eleven percent of Gen Z workers say their first investing experience was through crypto, as they report relying less on traditional retirement options


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key takeaways

  • 46% and 45% of Gen Z members and millenials, respectively, said they wish they could invest in crypto via their 401(k)s
  • Outside of 401(k)s, 25% of respondents said they are investing in crypto as a method to save or invest in retirement

The young, at least in the US, are leaning less on traditional 401(k)s to save for retirement — increasingly favoring fresh options such as crypto, per a new Charles Schwab study. 

The study found that 37% of Gen Z workers and 54% of millennials say their first investing experience was through a 401(k)  — lower than 61% for both Gen X and baby boomers. 

Instead, the two younger segments are more likely to also invest in crypto, real estate, annuities and small businesses than their older counterparts. Roughly 22% of Gen Z workers first got involved in investing through mobile trading, the study found, while 11% first invested in crypto.

The online survey, conducted in April by Logica Research for Schwab Retirement Plan Services, comprised 1,000 US 401(k) plan participants.

Younger people are questioning traditional approaches to work and retirement as they have changed jobs and reconsidered priorities during the pandemic, Catherine Golladay, head of Schwab Workplace Financial Services, said in a statement.

“The 401(k), while still their primary retirement savings tool, is no longer viewed as their only path to retirement,” Golladay said. “They see an opportunity to reach their financial goals through diverse assets that are making them excited about investing and engaged in their financial futures.”

Thirty-two percent of respondents said they wished they could invest in crypto via their 401(k) — with 46% and 45% of Gen Z and millenials, respectively, reporting that preference. 

Fidelity Investments said in April it was set to allow individuals to allocate a portion of their retirement savings to bitcoin through the company’s in-house 401(k) plans. A spokesperson told Blockworks last week that the company’s Digital Assets Account was on track to launch its first plan sponsor clients this fall.

A Charles Scwhab spokesperson declined to comment on whether they would seek to launch a similar offering.

Crypto payroll solutions company Bitwage partnered with 401(k) provider ForUsAll earlier this month to allow crypto into 401(k)s on a pre-tax or post-tax basis. Bitwage CEO Jonathan Chester told Blockworks he expects younger workers who generally underutilize the 401(k) may seek to get crypto exposure via retirement accounts for tax savings. 

“[That could] bring more people within the millennial and Gen Z groups into the fold to maybe utilize these systems in unique ways,” Chester said. “It would be much harder to do that through a 401(k), because the employer has a fiduciary responsibility, so I would imagine that independent retirement accounts [IRAs] would lead the way.”

Outside of 401(k)s, 61% of those surveyed said they are using a savings account to save or invest for retirement, while 25% said they are investing in crypto. Millennials were most likely to invest in crypto — at 35% — while just 4% of baby boomers are doing so. 

Thirty-nine percent reported saving in a health savings account (HSA), while 33% and 29%, respectively, said they are investing in an IRA or a brokerage account. 

The study comes during a year in which Charles Schwab and other large financial services companies have become more involved in crypto.

Charles Schwab brought to market its first crypto-related ETF in August following similar launches by competitors BlackRock and Fidelity

Schwab was also among a group of companies, including Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital and Virtu Financial, to back crypto exchange EDX Markets last month.

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