Bitcoin: a solution to the end of traditional retirement, offering an alternative to inflation and the failures of pension systems.
Retirement as we know it may be coming to an end! The current pension system works like a pyramid scheme that is already in crisis. Therefore, even those seeking security with a private pension plan may find, in the future, that it will not be enough to cover their expenses in old age.
Did you know that INSS works in a similar way to a pyramid?
In a pyramid scheme, new participants are responsible for supporting the benefits of those who came before them. In Brazil, the social security system follows this model: younger workers pay for the pensions of those who are already retired.
This pyramid-shaped structure is unsustainable in the long term. As a result, many people will never be able to truly retire. Although they have received government benefits, the reality is that many need to continue working after retirement, as the value of their pension is insufficient to cover even basic expenses.
Today, this is the situation for most people. People work their entire lives waiting for retirement, but when it is their turn, either the minimum age is increased, or the amount of the benefit does not cover the costs of food, housing and health care.
Demographic changes
Those in the job market finance the retirement of those who have already stopped working, but with fewer people contributing and the cost of living rising, the system becomes increasingly unviable.
Since 1980, Brazil has undergone major changes in the demographic profile of its population. At that time, there were approximately 9.2 people of working age for every elderly person.
Today, however, this number has fallen to approximately 4 workers per retiree. And the forecast for 2060 is even more worrying: only 1.6 active people for each retiree.
This challenge is not exclusive to Brazil, but is a global trend.
The population is aging, and the demographic structure is undergoing significant changes. The number of young people is decreasing, while the number of elderly people is growing rapidly. This means that there are fewer and fewer active workers to support the pensions of those who have already retired from the labor market.
Furthermore, increasing life expectancy makes withdrawal funds even tighter as people live longer, requiring benefits for longer periods.
Inflation
A recent study revealed that 73% of Brazilians need to reduce their standard of living after retirement, as their INSS benefits are not enough to cover essential expenses. This means that, after a lifetime of work, the amount you contributed to the system is not enough to maintain the same standard of living as before. And this does not even take into account those who still have the responsibility of supporting children, nephews and grandchildren.
Additionally, when you retire, you start receiving less than you earned while you were working – approximately 69% of your last salary. For many people, this amount can be even lower, depending on their salary range.
For this reason, many elderly people end up continuing to work, even after retirement, to supplement their income.
What is the best alternative for retirement?
Unlike traditional currencies, Bitcoin is scarce: it is not possible to create more coins than what is already programmed into its code.
Thus, it does not allow monetary inflation, it is decentralized, which means that no government can monopolize it or change its rules, and you do not need to rely on banks or insurance companies to guarantee access to your own money in the future.
With these characteristics, Bitcoin tends to be increasingly used as a tool to protect retirement plans, preserving value over the years, regardless of the actions of governments and central banks.
Bitcoin is not only a key piece for your retirement, but also for anyone who wants to preserve value and achieve true financial freedom.
Over the years, it is becoming an indispensable asset in retirement plans, and for good reason: Bitcoin has shown consistent appreciation, (WELL) above the traditional market.
Since it was created 15 years ago, it has been the best performing asset in the world.
The image below highlights the performance of Bitcoin, represented by the orange line since 2020, compared to other assets.
The navy blue line shows fixed income; the Ibovespa appears in green, and gold in red. None of these assets managed to outperform price inflation (shown in the purple line) or monetary inflation (in the pink line).
So, as you can see, the only asset that managed to outperform both was Bitcoin.
Over the past 5 years, Bitcoin has averaged an impressive 155% annual return, while gold, an asset traditionally seen as a store of value, has averaged just 7% annual returns over the same period.
Bitcoin is the best performing financial asset in history, consistently outperforming other traditional investments.
Now, imagine that Bitcoin sees a significant drop in its annual appreciation, going from its historical average of 155% to just 20% per year. Even then, it would still outperform all traditional asset classes combined!
This is a point that many traditional financial experts end up ignoring!
Therefore, Bitcoin has the potential to transform the way people save and plan for the future. Even with modest exposure, it can significantly improve the performance of any investment portfolio.
Banco do Brasil accepting Bitcoin?
It is ironic that in 2024, Banco do Brasil announced that it will accept Bitcoin deposits for its private pension insurance company. This move illustrates how even traditional financial institutions, which have always been part of the system that Bitcoin aims to decentralize, are beginning to recognize the value and potential of this currency.
The fact that a state-owned bank is adapting to the reality of Bitcoin highlights how this new form of money is gaining traction, even among those who previously opposed or ignored its impact.
And this is not just happening in Brazil, in Japan, the world's largest pension fund is also exploring how to insert Bitcoin into its retirement plans, following a growing trend of financial institutions seeking to adapt to the new economic scenario, although without necessarily guaranteeing investors the same freedom that Bitcoin offers.
For all these reasons, Bitcoin has the potential to make traditional retirement obsolete.
Instead of relying on an insufficient benefit after decades of contributions, Bitcoin offers the opportunity to accumulate significant wealth over a lifetime. This way, the decision to stop working becomes yours, allowing you the freedom to choose when to rest or dedicate yourself to what truly makes sense for you.
Furthermore, with Bitcoin, you can accumulate enough resources to support your needs in old age, far beyond what a conventional retirement would allow. It can literally save many retirements that, if they depended only on fiduciary assets or the Social Security, would barely cover a portion of what was contributed throughout life.
So, Bitcoin can indeed be an essential part of anyone’s retirement plan.
