How the 20 Trillion Dollar US Debt could affect your retirement

Have you ever wondered how much Debt The US adds each year?


Below you will find the amount added to the US national debt for each fiscal year since 2010

In this six year span we added $7.917 Trillion, a 68% increase from the $11.657 trillion debt at the end of 2009.

US Debt

The figure 20 trillion almost sounds make-believe, so here is a way to conceptualize it:

  • Think about a single second of time.
  • If you had 1,000 of those seconds, that’d be 15 minutes.
  • A million seconds would be two weeks.
  • A billion seconds would be 32 years and a trillion seconds would be 32,000 years.
  • So, our national debt is 20 x 32,000 years worth of dollars. Sounds like a lot to me. You?

Now the ultimate question is how does this affect you and more specifically how does this affect your retirement planning?

We should start by looking at what problems having such a large amount of debt could cause and what those effects would be on your retirement planning.


1.    Increased Taxes:

One of the simplest ways to lower the national debt is to increase taxes. Let’s imagine you are in your 40s or 50s and like most normal financial planning, you put away money into a tax deferred IRA, 401k plan and others. 

Let’s fast forward 15-20 years when you are ready to retire. Now the national debt is over 30 trillion and the government is implementing a tax plan to help reduce this deficit. As a result, your taxes go up 10-15% a year.

This means your retirement savings just took a hit.

Now this is a complete hypothetical. Your taxes could go down. But with the information we have in regards to our national debt, it’s more realistic to see it go up over time.

2.    Cuts to Social Security and an aging population:

If spending keeps increasing and the debt keeps getting higher, you can imagine that Social Security will be scrutinized under a microscope. In 2017 alone, the government paid out a whopping $813 billion in OASI benefits.

With an aging population, I don’t imagine that number will go down on its own. Now imagine what will happen to Social Security if an administration starts/is forced to focus on cutting expenses. I doubt they will leave Social Security alone. 


3.    Inflation:

Can you guess what the long-term average inflation rate is?

It’s 3.22% - that doesn’t sound too bad until we realize that at that rate, prices will double every 20 years.

What do you think would happened to inflation if the US Government thought about printing some money to help manage their ever-growing debt problem?

If they did this, it could completely throw your retirement plan for a loop and leave your portfolio worth significantly less when you retire.

Our goal with this article is not to scare you. It’s more so to help you understand that planning for your future and the future of your family is complicated.

You need a plan that takes all of this into consideration and sets you up so that you have the best chance of success.

If you are interested in learning how to set yourself up for retirement and plan for your financial future you can attend one of our FREE private briefings.

Salvo Wealth Group

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