401(k) Participants Rank Crypto Dead Last as Preferred Option

A new survey that polled retirement plan sponsors, financial advisors and plan participants finds little appetite among plan participants to invest their retirement assets in cryptocurrency. 

In polling 558 plan participants about their preferred retirement asset options for 2023, Ubiquity Retirement + Savings’ inaugural “State of the Industry” survey reveals that only 3.5% of respondents selected crypto as one of their preferred retirement savings asset classes, ranking last among the offerings for investors. 

“With continued turmoil in the crypto space and huge amounts of volatility, I’m not surprised to see 401(k) plan participants shy away from crypto as an asset class for retirement savings,” stated Chad Parks, Founder and CEO of Ubiquity. “Retirement accounts are historically reserved for prudent and proven asset classes that are regulated and have demonstrable track records.” 

Instead, the data shows other asset options are far more attractive than crypto, including real estate at 33.2% and even gold, with 7.3% of participants choosing it over crypto. Not surprisingly, investing in a 401(k) (84%); other stock or bond investments (40.8%); and savings account (36.8%) comprised the top three options for saving for retirement.  

“We’ve never seen any demand for crypto from our plan participants or strategic partners. I think significantly more time and historical performance need to occur before we know if any crypto on the market today can offer long-term value, particularly as a retirement asset class,” added Parks.

The survey also found that plan participants’ top retirement concern is saving enough money ahead of retirement:

• Saving enough money ahead of retirement (34.2%)
• Running out of money during retirement (25.8%)
• Maintaining my lifestyle (15.7%)
• Leaving a financial legacy for my family (7.1%)
• Covering medical expenses (6.4%)
• Other (5.9%)
• Long-term care expenses (4.9%)

Plan participants also indicated that they do not expect to change their 401(k) behavior in 2023:

• 69.2% expect to make no change in their 401(k) contributions;
• 91.8% expect to not take out a 401(k) loan in 2023 despite fears of a recession; and
• 74.3% expect to make little or no change to the amount of risk they are willing to accept in their investments in 2023 despite fears of poor investment returns.

Inflation, Investment Concerns

Meanwhile, the firm’s portion of the survey that polled retirement plan sponsors and financial advisors on their industry sentiment and economic outlook finds shared concerns but also divergent views on their 2023 outlook. 

Most notably, the survey found that plan sponsors and financial advisors have opposite expectations for inflation at the end of 2023. In this case, nearly 6 in 10 (56%) financial advisors expect inflation to be lower by the end of 2023 versus the fourth quarter of 2022. In contrast, roughly the same amount of plan sponsors (57%) expect inflation to be higher at the end of 2023 versus Q4 2022. 

“One party is going to be right,” commented Parks. “It will be interesting to see where inflation is at the end of 2023 and whether plan sponsors or financial advisors had a better feel for this in Q4 2022.” 

Despite these disparate views, both groups share concerns over the possibility of a recession. According to the findings, 62% of plan sponsors and 57% of financial advisors are concerned about how a recession may impact the performance of 401(k) plans in 2023. 

And while worries about inflation and poor investment returns ranked high for both groups, respondents revealed that these fears did not move them to change their retirement planning strategies. In response to these concerns, 80.3% of plan sponsors expect to maintain their employee match. Moreover, financial advisors noted little to no change in 401(k) contributions, loans and risk appetite for clients in 2023. 

Ubiquity’s inaugural survey was conducted in fourth quarter of 2022 among over 1,100 401(k) plan participants, plan sponsors, financial advisors and solo entrepreneurs to take the pulse on their concerns about retirement planning as related to the economy and the state of their businesses.