For NFT creators who fall in the Indie artist category, managing retirement can be a challenge. When young, it’s hard to see the need to worry about it just yet. That blind spot can become perception, and some of us grow old without great retirement plans because we have not taken a more typical career path. Yet, retirement is something that we must eventually account for and the earlier the better. New options, including crypto IRAs, are emerging, though NFT IRAs seem unlikely in the States. And, whether we take the old-school financial approach or a more crypto-centred plan, underlying investment principles still apply.
Aging Indie Artists
Aging can be a really difficult process for Indie artists of all types. We find our faculties beginning to slip and fade even as we find greater depth in our understanding of the world. And we start to discover, if we hadn’t realized it already, that a lot of people just don’t like old people.
We’re surrounded by ageists on social media, some of whom are also indie artists. Many of us live in nations where there is little assurance of care. And some politicians keep running and even winning on a commitment to take away what little the elderly can depend on.
Given this context, it makes great sense to take charge of your financial future, inasmuch as you’re able, given the realities of how most societies treat their elderly citizens.
401(k)s, IRAs, Social Security and Medicare
Retirement is handled differently by different nations but often with similar approaches. No matter what your age, digging in and understanding your home country’s approach is a key first step.
In the U.S., retirement is typically funded by the following sources with some oversimplification of those categories:
- money saved while working for an employer who may match those savings (401Ks);
- money saved independently and held in an investment retirement account (IRA);
- government payments based on your top 35 years of employment (Social Security);
- health care financing programs (Medicare).
NFT creators who are self-employed Indie artists and have worked for employers irregularly:
- may not have 401(k)s,
- may not have IRAs or significant savings accounts,
- may not have 35 substantial years of income to ensure a living wage from Social Security,
- may have health issues that are not covered by Medicare.
Given potentially grim outcomes, the reality of life for many such artists makes good retirement planning even more essential.
NFT Creators: Indie Artists, Freelancers, Self-Employed
NFT artists with retirement challenges may fall under broader categories of Indie artists, freelancers and the self-employed. Here are some starting places for Indie artist insights but be sure to look for locale-specific information for freelancers and self-employed workers as well.
United Kingdom – Pensions for Musicians
United States – How to Build Your Own Retirement Plan
Ireland – Pensions for Artists
Crypto IRAs and the DeFi Future
Once you feel comfortable with your understanding of your home country’s retirement processes, you may well want to explore the emerging possibilities related to cryptocurrency and NFTs. In the States, my favourite is the Roth IRA because there are now crypto options.
The Roth IRA is attractive because you can essentially put money in, pay the taxes on that money, and then trade whatever’s in your IRA without additional taxes on trades or on eventually withdrawn funds. A number of crypto IRAs are currently available though not from traditional sources. These new IRAs require fiat funding but, once opened, can hold crypto and, sometimes, other alternative assets such as gold and silver.
In this recent take on available crypto IRAs, you’ll see the phrase ‘bitcoin IRAs.’ Crypto IRAs started with bitcoin and many people are still entering through bitcoin.
Unfortunately, NFTs are still a bit of a grey area. The IRS says collectibles cannot be held in IRAs but have not yet ruled on whether or not an NFT is a collectible. Since works of art are considered collectibles by the IRA, NFTs seem likely to follow suit. So, for now, no one seems to be offering an NFT IRA.
Crypto IRAs adapt a traditional investment vehicle to the world of crypto. But, given the creativity we’ve seen in DeFi, it’s not surprising to see advocates already making the connections between defi and retirement. Such innovation seems likely to include NFTs as well.
Even without the growing correlation between crypto trading and stock trading, which began in 2020, traditional investing principles do apply to crypto trading and, in many ways, to NFT trading. For example, the concept of taking greater investment risk when young and gradually reducing that risk as one ages, is well-established in traditional investing. The idea is that you increase your potential rewards while you can take the loss and, over time, shift to a focus on more modest growth and/or maintenance of investment income.
One way risk can be reduced is by choosing to “invest for the long term” because, as the old saying goes, ‘time in the market beats timing the market.’
Diversification is also a big part of long-term investing success. It’s one reason financial institutions are beginning to add some crypto and it applies to individual investors as well.
Keeping fees and other expenses low is another key which may be a natural fit for investors in crypto and NFTs.
Finally, this one makes me chuckle because crypto and NFT traders regularly stare in the face of absurd volatility:
“Anticipate Market Volatility and Make it Your Friend”
The End Is Near
An old saying goes, ‘nothing is sure except death and taxes.” For those of us who get to experience retirement or, at least, old age, it should be a blessing to grow old since many will not have that experience.
Even if the larger picture improves and human beings rediscover the value of all human life, it makes sense to plan for your final years on Earth. You already have art, a source of the greatest riches known to humans. The sooner you accept the need to begin preparing for retirement, the sooner you can ensure yourself of increased financial riches, as well.
Featured Image: Piggy Bank Money by QuinceCreative via Pixabay